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Brisk trading in NDB rights with high net worth investors seeing long term value

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There has been considerable investor interest in the ongoing rights issue of the National Development Bank PLC closing later this week with 35.9 million rights transacted on the trading floor of the Colombo Stock Exchange up to Friday by way of 3,825 trades at a high of Rs. 2.50 per right when trading opened on April 27 and a low of 50 cents on Friday, stock analysts said.

Each new rights share will be issued at Rs. 75, with existing shareholders entitled to 28 new shares for every 61 they presently hold.

“The secondary market price of NDB was fairly close to the issue price at the time of the rights allotment,” a share broker said. “In that context many shareholders were interested in selling their rights at the best price they would command rather than taking new shares. Some market players sold some of their NDB shares soon after the rights issue announcement, planning to re-enter the stock at the lower rights price and possibly increasing their holdings with applications for additional shares. The early birds did better than those who transacted later.”

The last day for acceptance and payment for the new shares is May 5 when the issue closes with renunciation of rights entitlements closing the previous day.

Shares remaining unsubscribed will be initially allotted to Norfund up to 9.99% of the bank’ equity and thereafter, if available, to others including legal entities seeking unsubscribed shares. This will be subject Banking Act restrictions, NDB said in a circular.

A previous rights issue by the NDB several months ago was under-subscribed. In that context, the bank reached an agreements with the Norwegian Development Fund (Norfund), fully owned by the Government of Norway to take a stake in NDB by way of a private placement at a price of Rs. 82.50 a share – Rs. 7.50 higher than they were being offered to existing shareholders through the rights issue.

Analysts said that a total of approx. 106.78 million new shares were being offered by way of rights and approx. 37.6 million by way of the private placement with Norfund.

Existing shareholders were permitted the opportunity to apply for more than their rights entitlement at the same Rs. 75 rights price. Allotment of unsubscribed rights shares to such applicants would be on a “reasonable basis” depending on the availability and subject to restrictions under the Banking Act.

The rights share was considered a good long-term investment in the context of the price of both the rights and privately placed share was less than half the NDB’s net assets value per share which stood at Rs. 192.49.

“That’s the reason for the interest in the issue and the brisk trading of rights on the trading floor,” a broker explained. “Paying a small premium to acquire more than their entitlement was considered worthwhile by some high net worth long-term investors in this context.”

Additionally, there was also the factor that transaction cost applicable to secondary market deals do not apply to tights issues and is a further saving on cost.

Norfund’s only investment in Sri Lanka ahead of its entry into the NDB is a stake in Softlogic Life Insurance and it is looking for further potential investment here, according to NDB. The fund which has committed investments worth over USD 2.88 million up to the end of 2019 prioritizes investment in clean energy, financial institutions, green infrastructure and scalable enterprises aligned with UN sustainable development goals.

If it succeeds in achieving its objective of acquiring 9.99% of NDB equity, it will be the second largest shareholder of the bank behind the EPF which owns 10% Other big shareholders include the Bank of Ceylon (8.36%), Sri Lanka Insurance Corporation (SLIC) General Fund (6.39%), Life Fund (4.37%) and Dr. Sena Yaddehige (4.37%).

Softlogic Insurance, ETF, Perpetual Treasuries, Richard Pieris, HNB and Phoenix Ventures are the other big institutional shareholders. Individually, the biggest private shareholders are Messrs. Ashok Pathirage and Merril. J. Fernando.

The issue has been structured in a fashion that the maximum number of shares Norfund can subscribe for will not trigger the SEC’s mandatory offer requirements under its Takeovers and Mergers Code. This requires any investor acquiring 30% or more of a listed company to offer minority shareholders the highest price they have paid in the previous 12 months for that company’s shares.

NDB said the private placement will only take place if Norfund is unable to get the 9.99% stake under the rights issue.



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Hemas Hospitals launches ‘Deewara Diri Savi’ to support fishing community

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The donation programme was coordinated with the support of the Rev. Fr. Ajith Kamal, Parish Priest of Our Lady of Mt. Carmel Church in Palliyawatta, who spearheaded the coordination on behalf of the fishing community in the Palliyawatta, Dikowita and Awarakotuwa areas.

Hemas Hospitals launches the ‘Deewara Diri Savi’ mega donation drive to support and empower the fishing community along the Western Coast of the country, whose livelihoods were gravely impacted by the marine destruction caused by the X-Press Pearl ship disaster.

Under ‘Deewara Diri Savi’, Hemas Hospitals will oversee the donation of complete dry ration packs to 818 families in the Wattala fishing community, who have now lost their sole source of income for survival and is undergoing extreme distress due to the implications caused by COVID-19 pandemic together with the fishing ban imposed due to the X-Press Pearl disaster. Further, Hemas Hospitals Wattala is also offering free OPD consultation services to these families to ensure that their wellbeing and access to healthcare is secure and continued during this period.

“Our mission, values and corporate culture guide our actions as we strive hard to deliver on the promise of making healthful living happen to communities across the nation. ‘Deewara Diri Savi’ was founded upon this ethos as we care for, uplift and empower Sri Lanka’s fishing community struggling to make ends meet due to the mass implications and destruction caused to our marine resources with the X-Press Pearl disaster. As a responsible healthcare leader, we will continue to invest our resources and take swift action in supporting this community who add so much to our economy as they transition through this deeply difficult, critical time,” Hemas Hospitals and Laboratories Managing Director and President, Association of Private Hospitals and Nursing Homes Dr. Lakith Peiris stated.

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Looming challenges contribute to subdued trading activity at CSE

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By Hiran H.Senewiratne 

Share trading activity at the Colombo Stock Exchange (CSE) was negative yesterday as investors were in a state of uncertainty due to the glaring economic woes of the country. The recent fuel price hike, the worries over possible deprivation of the European Union’s GSP Plus trade facility as well as declining foreign exchange reserves put the local and foreign investors in an indecisive mood, stock market analysts said.

The fuel price hike is likely to increase inflationary pressure especially in the manufacturing sector. This would adversely reflect on manufacturing sector counters in the stock market. Further the sovereign bond repayment amounting to US $ one billion in July 2021 with existing reserves just above US $ four billion could worsen the economic crisis to a great extent, stock market analysts said.

Reportedly the Central Bank has informed the Ministry of Finance that due to the Rs 600 billion in loans to the Petroleum Corporation there is risk to the entire banking system being destabilized and collapsing, In such a context, the banking sector counters did not perform positively yesterday, stock market analysts said. The CPC itself has about Rs 390 billion in accumulated losses.

Amid those developments both indices moved downwards. All Share Price Index was down by 28.02 points and S&P SL20 down by 11.43 points.Turnover stood at Rs 1.36 billion with a single crossing. The crossing took place in People’s Leasing, which crossed two million shares to the tune of Rs 26 million and its share price traded at Rs 13.

In the retail market top five companies that mainly contributed to the turnover were LOLC Rs 156.8 million (406,000 shares traded), Royal Ceramic Rs 105 million Rs 105 million (2.78 million shares traded), Lanka IOC Rs 104.1 million (4.56 million shares traded), Hayleys Rs 76.1 million (one million shares traded) and Hayleys Fabrics Rs 51.6 million (2.85 million shares traded).

With the fuel price hike, Lanka IOC share price positively reflected in the stock market. Its share appreciated by 12 percent or Rs 2.40. Lanka-IOC share price started trading at Rs 20.60 and at the end of the day it moved up to Rs 23. During the 68.98 million share volumes changed hands in 18263 transactions.  

 

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Standard Chartered helps fast-track COVID-19 vaccination efforts in Sri Lanka

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Standard Chartered Sri Lanka has successfully financed the import of 4 million COVID-19 vaccine doses for the State Pharmaceuticals Corporation by facilitating a trade loan to the Bank of Ceylon and People’s Bank, the Bank announced recently.

In efforts to expedite the nation’s vaccination programme during the latest wave of the COVID-19 pandemic, Standard Chartered worked closely with the two leading state-owned banks to facilitate prompt and efficient trade financing solutions to help accelerate the invoice processing and payments to purchase the vaccines.

“Across the globe, Standard Chartered has been in the forefront to help local communities to fight the coronavirus pandemic so that the world can look forward to a better tomorrow. When the first wave hit Sri Lanka last year, Standard Chartered made a much-needed donation of USD500,000 to the Sri Lanka Red Cross Society to support emergency relief activities island-wide. This trade loan is a continuation of the Bank’s efforts to help the citizens of Sri Lanka overcome the pandemic and is a testament of Standard Chartered’s ‘here for good’ promise,” said Bingumal Thewarathanthri, Chief Executive Officer, Standard Chartered Sri Lanka.

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