Company pleased but analysts say share overpriced:

Ceylinco Insurance share issue raises Rs 1.13 b

Ravi LADDUWAHETTY

The Rs. 1.5 billion Ceylinco Insurance non-voting share issue which closed on Wednesday after 14 market days, raised only Rs. 1130 million.

However, the company was satisfied that it raised over a billion rupees in depressed market conditions, though falling short by around Rs. 300 million.

“We are happy that we managed to raise over a billion rupees under these depressing market conditions though we fell short by the requisite target.

This was the highest value for a non voting share issue which was Rs. 1487 million and the price of Rs. 175 was also the highest for a non voting share issue and we are happy that we raised Rs. 1130 million under bear market conditions which is indeed satisfactory,” Ceylinco Insurance Chief Executive Director Ajit Gunawardena told Daily News Business.

He said there was also two Indian parties and a Malaysian party which was wanting to acquire the whole issue which it rejected due to the need for broad basing it.

“The company also did not want to underwrite the issue and that would also have had complications and additional expenditure,” Gunawardena said.

He added that 25 per cent of the investors were foreign investors while a further 25 to 30 per cent were local corporates.

The others were the local retail investors. He was also confident that the non-voting share will soon rise to the level of voting share. However, despite Ceylinco Insurance claiming the company has raised Rs. 1130 million, a letter from the company to the Colombo Stock Exchange’s Assistant General Manager (Regulatory Affairs) Renuka Wijewardhana dated July 8 said the total collected as at that date was Rs. 581,485,800.00 through 3,322,776 shares and the number of applicants as at that date was 1760.

Market analysts were agog as to how a company, which had raised only Rs. 581 million in nearly a fortnight by Tuesday could have collected a record Rs. 600 million plus in a single day when the issue closed on Wednesday.

Market analysts also pointed out that the non -voting issue was far too over priced and that the Rights Issue was anticipated. They said the announcement of the non voting share depressed the voting share, the latter was artificially floated which went to Rs. 220 with the investors speculating a bonus issue. They said the local investors who bought the non-voting share were policyholders who could not distinguish between the non-voting and the voting share.