SEC exercises vigilance on Janashakthi share trades
The Janashakthi Insurance PLC’s (Janashakthi) Rs. 16.4 billion sale earlier this month of its general insurance business to multinational insurer, Germany’s Allianz, has rung alarm bells at the stock market regulator after a spurt in the share price just before the sale, informed sources said.
The Securities and Exchange Commission (SEC) is investigating a sharp rise in the share price of Janashakthi Insurance which went up by 44 per cent from Rs. 16.10 on January 29 to Rs. 23.20 on February 1, a day before the February 2 deal, they told the Business Times.
According to the share trades, 853,000 shares were sold on January 29, 10.5 million shares on January 30 (at Rs. 20) and 7.8 million shares on February 1. On February 2, the day the deal was done, 16.4 million shares were transacted throughout the day, touching a high of Rs. 28.40 per share.
Analysts said that the regulator is looking at the over 10 million share sale by Bank of Ceylon (BoC). Informed sources said that selling this large Janashakthi stake three days before the company changed hands has led to an unusual share price increase.
The BoC at current market rates (at Rs. 20) made a profit by selling the stock which they bought years ago at Rs. 10, to high networth investor Indra Silva, but they could have made much more had they waited till the sale happened, analysts say.
The regulator is trying to find out how information on the sale was leaked (possibly to BoC) before this transaction with Allianz, the German-headquartered financial services giant happened, BoC officials confirmed to the Business Times. The SEC is now recording statements from certain BoC officials, they added. “The SEC wants to establish who had advised BoC on this sale and who had made the investment decision,” a banking source told the Business Times.