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Perpetual group owns 7 million shares in NDB
View(s):By Namini Wijedasa
The Perpetual Group now owns around seven percent of National Development Bank’s share portfolio, authoritative sources said this week, adding that the firm’s objective might be to gradually raise this stake up to ten percent. Perpetual Treasuries, the controversial primary dealer at the centre of the Central Bank bond issue, holds around seven million of these shares. As a sum total, the Perpetual Group has so far invested around Rs. 2 billion in NDB.
Perpetual started buying NDB shares on August 19 this year. It used two margin trading accounts — Waldock Mackenize Perpetual and Union Bank Perpetual — while its broker is Bartleet Religare Securities. They set out by collecting smaller quantities but the volume gradually expanded. The two main companies that hold NDB shares are Perpetual Equities and Perpetual Treasuries. As at September, Perpetual Treasuries had bought around 6.1 million NDB shares directly; around 4.5 million shares through Union Bank/Perpetual Equities (Pvt) Ltd; and around 325,000 shares through Waldock Mackenzie/Perpetual Equities (Pvt) Ltd.
Recently, Union Bank/Perpetual Equities unloaded around 3.9 million NDB shares to Perpetual Equities through a private transfer. And on Tuesday, Perpetual Equities in turn sold 1.2 million of these shares to Perpetual Treasuries for around Rs. 181 million, the sources revealed.
So far, Waldock Mackenzie/Perpetual Equities still holds around 800,000 NDB shares while Union Bank/Perpetual Equities has around 600,000.
“Ultimately, they are unloading shares to Perpetual Treasuries,” one said. “The motive is not too clear. However, there is nothing illegal from the point of view of the capital market.” He said it remains to be seen whether Perpetual is acting in concert with other high net worth investors in NDB. They include Rusi Captain, Sena Yaddehige and Ashok Pathirage.
The current directors of Perpetual Treasuries are Geoffrey Joseph Aloysius, Chitha Ranjan Hulugalle, Ajahn Gardiye Punchihewa and Hettiyadura Shiran Sanjeewa Fernando. Arjun Aloysius resigned as director of Perpetual Treasuries on January 16, 2015, a few days before his father-in-law Arjuna Mahendran was officially appointed Central Bank Governor. But he is believed to be closely associated with the activities of the Perpetual Group and is said to be looking for ventures to park the company’s recent gains in.
Perpetual Treasuries Limited recorded a profit of Rs. 5.1 billion for the year ending March 2016. This was an increase of 430 percent in comparison to the previous year. The profits do not include the Rs. 5 billion worth of bonds Perpetual Treasuries controversially bought at 12.5 percent in February 2015.
Last week, the Committee on Public Enterprises (COPE) released the results of its investigation into the bond transaction. It concluded there were reasonable grounds to believe that Mr. Mahendran had made an intervention or used pressure in the bond transaction that took place on February 27, 2015. COPE also said it was the responsibility of Parliament to recover the losses incurred by the Government.