Financial Times

SLIC to list this year?
The much anticipated Sri Lanka Insurance Corporation Ltd’s (SLIC) initial public offering (IPO) is expected in mid-2006 on the Colombo Stock Exchange (CSE) with the company slated to list around a 40-49 percent stake.

Stockbrokers quoted SLIC sources as confirming the IPO will happen this year, because they feel the market conditions are favourable. “The SLIC sources said the IPO was supposed to come last year, but due to the uncertain peace process and general investment climate in the country, they had put it off. This year they are positive about coming in with an IPO,” a stockbroker told The Sunday Times FT.

The Distilleries Company of Sri Lanka (DCSL) holds 84 percent of SLIC and analysts said the divestiture will see a big jump in the earnings of DCSL in the first year, because of the huge capital gain, but the consolidated earnings per share (EPS) will drop in the following years.

“When DCSL profits are consolidated the minority interest of 40 percent in SLIC will be deducted and on a ‘going concern’ basis their EPS will see a considerable fall,” an analyst said.

A stock analyst said the listing will give the company a lot of transparency. “It will give the company a lot of transparency in terms of disclosing information, which is a good thing given its size,” a stock analyst said. He said since SLIC is the largest insurance firm in the country it needs to have transparency and accountability, because of the substantial amount of public funds it holds.

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