Business Times

IPOs and private placement issues cloud market sentiment

Stock Market Review
By Elton Ebert

The disparity between the private placement and the I PO pricing will be have to be addressed if the future IPOs are to be successful. What has to be prevented is a "massacre of the small investors" as mentioned by the director of a brokerage recently. A good example of the disullusionment of some of the small investors, is the instance when they invested in Free Lanka Capital Holdings, depicted by the current level of the share which is Rs.5.20.

The next IPO - Expolanka which is offering 127 million shares at Rs 14 scheduled for May 12 should be fully subscribed due to the publicity through the roadshows and other factors. Also there should be no controversy with the Textured Jersey Lanka IPO since they have clearly stated that the IPO will be at the same price as the private placement. However the IPOs that are to follow will be keenly scrutinised, especially because most retail and the High Networth Investors have tied up their funds, and they will be very cautious.

During the week shares in the Motor sector fluctuated, except for Lanka Ashok Leyland which went on the over- drive touching Rs 7,490 on April 28 in the belief that a share split is likely. However it took a slide the next day to close at Rs 6,000. Colombo Fort Land & Building which carried the benefit of the 1 for 5 sub division until April 9 closed at Rs 420.

Highly respected professional Trevine Jayasekara, an Independent Non Executive Director at Hayleys, has stated well before the AGM scheduled for sometime in the month of June that he will not be standing for re-election. Probably the AGM will be a historic one with the new Royal Ceramics/ Dhammika Perera-led board driving home their resolutions and plans. Reports have been surfacing that this powerful shareholder was not happy with the independent directors and wanted a new set.

Meanwhile Royal Ceramics has produced impressive growth figures per the report just released. By way of its share price, Royal Ceramics rose to Rs 156 but tapered down to Rs 152 at the close while Hayleys also closed lower at Rs 400.

The Insurance Corporation which has secured a 10% stake in Colombo Dockyard is seeking to nominate a nominee director to the board. Commercial Credit Ltd will be listing by way of an introduction 218,074.365 ordinary shares on the Diri Savi Board. There should be many more registered financial institutions seeking a listing to comply with the Central Bank ruling.

The duration of the 10% price band has been reduced to five days effective April 29. A price band was imposed on Beruwela Walk Inn covering the period April 26 to May 10. The All Share Price Index was 99.95 points or 0.01% lower at 7356.97 while the Milanka was 124.57 points or 0.12% lower at 6822.77. The turnover for the week was up at Rs 8.2 billion against Rs.6.8 billion for the 4 days of trading last week.

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