Spate of IPOs at CSE to continue into the New Year
Low-interest rates and lack of alternative investment options are driving the Colombo stock market which saw all its public offers being oversubscribed by large multiples.
For instance, Sri Lankan multinational software solutions provider, hSenid IPO opened on December 3, was oversubscribed in a matter of hours, receiving over Rs. 9.3 billion worth of applications from 10,602 applicants, for a total subscription of 745,014,900 shares, against a total of 55,339,076 shares on offer. The hSenid offer closed at 4.30 pm on the same day, oversubscribed by 13.5 times.
For the past two years there has been a lack of real business opportunities, so lots of money that would have been deployed for import businesses, in particular, were redirected to the stock market, a market analyst told the Business Times on Wednesday.
This has been a contributing factor for the success of all the Initial Public Offerings (IPOs) completed so far, he added.
The latest IPO to open was Kapruka Holdings Limited, Sri Lanka’s pioneering e-commerce platform. On Wednesday, this public offer opened tendering 32,826,000 ordinary voting shares or 20 per cent stake in the company, at Rs.15.40 per share, to raise nearly Rs.505 million in equity capital. It was oversubscribed even before it opened.
Easing tax policies along with digitised IPO submissions have attracted privately held companies to go public, Colombo Stock Exchange (CSE) officials told the Business Times. They said nearly 20 IPOs are supposed to come out this year, but all might not be possible to complete before the end of the month. However, the tax concessions are not applicable for next year. The government’s 2022 budget did not grant any concessions or incentives for any of the sectors.
But given the enthusiasm for the IPOs and the unprecedented highs of the CSE more companies will follow suit to raise capital through the IPO route, stock market analysts said. Already investment bankers are pretty busy with new listings for next year, a market analyst said.
The debenture issues have also been very successful. The most recent is the renewable energy developer Resus Energy gearing to raise up to Rs.1.2 billion via a listed debenture issue corresponding to 12 million listed, rated, unsecured, senior, redeemable debentures at par value of Rs.100 each.
The investors are oblivious to the larger macroeconomic concerns the country is going through. “There is a lot of liquidity in the market right now. A lot of new investors and mature investors with plenty of cash are parking their money in the CSE. These highs will last well into the new year, provided the central bank does not raise interest rates,” a second market analyst said.
Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deciding on what will work best for you!