Ceylinco rights issue: 8.5 million shares to be offered

Ceylinco Insurance Company Ltd (Ceylinco) is gearing for a non voting rights issue strongly believed to be to strengthen its capital, according to stock market sources. The company announced a non voting 8.5 million share issue to be offered at Rs.175 per share on Friday.

A stock market analyst noted that the timelines to raise capital as per the stipulations of the Insurance Board of Sri Lanka (IBSL) are fast approaching. “All insurance firms need to raise capital and they have been given specific timelines, of which some will end in 2009. This rights issue may be a step towards that,” the analyst further noted.

He said some company officials during the past few weeks had approached key investors with regard to the rights issue and made presentations to them.

Last year on March 28, the company, through a board resolution decided to raise funds by way of an initial public share issue of non voting ordinary shares and also list these shares in the Colombo Stock Exchange (CSE), but two months later decided to postpone the issue.

“The Ceylinco share fell steeply, because the market reacted negatively to it. When the company announced that they were not going ahead with it the share rose to substantial levels again,” a stock market analyst noted. The Ceylinco share which closed at Rs.220 on Thursday, dropped on Friday by Rs.18 to close at Rs.204.