Financial Times

Sri Lanka’s largest construction company comes out of the closet
Sierra group to raise public funds
By Feizal Samath
Sierra, Sri Lanka’s largest construction firm that has maintained a low profile for many years, is planning to go public and enter Colombo’s stockmarket as it reaches its 25th anniversary next year.

Launched in 1981 by Frank Irugalbandara, an architect who still handles outside assignments in addition to his active role as chairman of the group (which goes as Sierra Construction), the organisation is aiming to raise its paid up capital to Rs 1 billion from a current Rs 800-plus million.

“We’re considering various options in the IPO (Initial Public Offering) phase like whether we should list one or a few companies in the group or the group itself,” noted Irugalbandara, a soft-spoken and modest entrepreneur who has steered the group to a range of activities like construction, infrastructure, cable production, leisure, televisions and property development.

Asked what stake was being offered, he said, “maybe 10-20 percent.”
Though founded by Irugalbandara, shares in the group are equally held by its four directors (25 percent each including the chairman).

All profits have been ploughed back to the company and no dividends have been declared to the shareholders (four directors). The group also owns the exclusive Elephant Corridor hotel at Sigiriya.

One of its biggest current projects is transforming a 1,000-acre block at Kandapola in Nuwara Eliya into a holiday complex with 300 Scottish-styled bungalows on 300 acres and the balance 700 acres for eco tourism, farm management, flower and vegetable gardens.

“We want to create another Nuwara Eliya as this old holiday resort is now chock-a-block and there’s hardly any room,” Irugalbandara told The Sunday Times FT in an interview in his sparsely furnished office in Colombo.

The holiday complex, designed by a British architect and estimated to cost Rs 4-5 billion, will have a 40-room hotel to service the facility. Each bungalow (between 2,000 to 5,000 sq. feet) will be built on land ranging from a minimum 40 to 80 perches and even an acre of land, depending on customer requirements.

The company is also considering building a man-made lake for trout fishing and other water-related activity based on permission from the authorities. Bungalows will cost between Rs 18 to Rs 30 million each. “Our client base would be corporates, high net worth individuals, public figures locally and internationally, actors or cricketers,” he said.

The project was conceived three years ago and some options being considered now are to bring in partners including banks. “We are interested in equity participation,” Irugalbandara said. The Sierra chairman was drawn to such an initiative having realised that Nuwara Eliya is not like in the good old days.

“Those days we had many places to visit and they weren’t crowded.
The Park was spacious … now there is hardly space to walk. It was less noisy too,” he said reflecting on a bygone era. Irugalbandara’s two daughters are also with the group but as accountants in different subsidiaries. “They need to come up the ladder – like anyone else -- instead of being appointed at the top and they are happy with this,” he said.

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