Guardian Capital Partners Plc (GCP), formerly Watapota Investments PLC and continuing as a subsidiary of Carson Cumberbatch Plc which holds an 86.73% stake, is changing its investment strategy and investing in more lucrative private equity investments.
The company said in a statement this week that it is planning to raise Rs. 503 million as the initial funding requirements of the company for private equity investments via a right issue.
“Out if the rights issue proceeds, Rs. 250 million will be used immediately for private equity investment in Expolanka Holdings Ltd with approval of the shareholders as the investment. The company will be acquiring 41,600.000 shares of Expolanka Holdings at Rs. 6 per share which amounts to a 2.34% stake of the company,” it said.
These investments would be in projects that are exposed to growth sectors of the company which are expected to benefit from the post war economic recovery in the country, the statement added.
Explaining the reasons for the rights issue, Guardian Capital said in the backdrop of steady growth forecasts for the country many private unlisted companies are now evaluating the option of listing those companies to raise funds for new ventures and realise value for the promoters.
“Further, attractive valuations of listed companies in the CSE have given the opportunity for the shareholders of privately held companies to attract ‘Private Equity Investors’ at attractive valuations to partner in their business objectives in terms of financing new investment activities and restructuring their balance sheets in preparation for a listing.
It said Expolanka Holdings is the holding company of a regional freight forwarding business, which is their principal line of activity. The balance funds (from the rights issue) would be invested in appropriate private equity projects which meet the investment criteria set by the Investment Managers.
“In the interim period, such surplus funds would be invested in suitable short term fixed income instruments at market rate of return. The timing of the balance investments will depend on the availability of attractive private equity investments opportunities. The company is currently evaluating a few of such private equity investments and would accept them provided they satisfy the investment and return criteria of the company,” the statement added.