Infrastructure listings on CSE

The Securities and Exchange Commission (SEC) is looking at the viability of listing infrastructure projects on the Colombo Stock exchange (CSE), in a bid to attract more liquidity into the market.

“We have put this idea across to the Treasury to list infrastructure projects such as the Colombo Katunayake Expressway (CKE) in the CSE to raise capital for the project,” Gamini Wickramasinghe, Chairman SEC told The Sunday Times FT. He said the details had still to be worked out but the SEC had suggested that the project could be backed by a recognised local or an international firm. “They can perhaps lend a name to the project to raise capital,” he further explained.

He said that as an example once a road project was completed the revenue could be generated through charging a fee from each motorist who uses it. “These are called toll roads and a popular concept in developed economies,” he said. Wickramasinghe said the SEC is looking beyond its traditional role of regulator to promote companies to list in the CSE. “We are approaching local firms sector by sector,” he said, adding that recently the SEC together with the CSE had a seminar for top 10 potential companies for initial public offerings (IPOs).

“In the next few months we will have similar seminars for the apparel and the software sectors,” Wickramasinghe added.

He said that the SEC also sees a lot of scope in securitization. “We are currently working with the Department of Inland Revenue to give tax concessions to companies who want to get into securitisation,” he said adding that at present, many finance companies and leasing firms are ready for this.

Wickramasinghe said the SEC is targeting a 20 billion - dollar market capitalisation within the next three years from a current $7.7 billion. “It is nearly three times the present size and to reach this, we need to get some state organisations,” he explained. He said that the next step will be to attract the local diaspora in other countries. “We need more liquidity in the market to do so.”

Some five firms have got the approval to list in the CSE, but they are waiting for the right time, he said. “We need about one billion dollars in the market to attract more investors and around 15 to 20 firms need to be listed to add to this size,” he added. He said that peace will be the icing on the cake, but irrespective of war or peace the local capital market has given an average return of more than 30 percent during the last few years.