Myland Developments to list on CSE’s Diri Savi Board; announces 17% stake IPO

A home-grown entity hailing from the Gampaha District, Myland Developments Ltd. has announced its intentions to list on the Diri Savi Board of the CSE, offering a 17% stake to the  general investing  public. An emerging and a notable player in the real estate sector in Sri Lanka, it plans to capitalise on the fast-growing demand for affordable lands in the suburbs of Colombo and in Gampaha District, and thereafter gradually  expand its business to other regions of the country. The company’s Founder and Managing Director Nalin Perera in an interview with Daily FT shared his views on the planned IPO on the CSE, whilst outlining its business model and plans for the future in the post IPO environment. 

Following are excerpts:

Myland Developments Founder/Managing Director Nalin Perera

Q: What is the background of Myland Developments Ltd.?

 Myland was incorporated as a limited liability company in March 2017, with the vision to support every Sri Lankan individual living within the country or outside the country to purchase a land plot and build their dream home, or purchase a land for investment purposes. Registered office of the company is situated at No. 136/19, Kandy Road, Kadawatha.

The initial focus of the company revolved around the noble intention of supporting and assisting the buyer community with fair and reasonable price ranges for lands. The company’s operations thus far have been predominantly focused within the western region of Sri Lanka.   

Most importantly we have successfully identified the gap amongst young individuals who aspire to become land owners, either to build their future homes or to hold such properties as investment assets. We created the company to meet this gap by mainly focusing on the said market segment.

Since 2017, we have successfully completed over 20 projects within Colombo District and in Gampaha District. Currently four projects are ongoing and nearing completion.   

Q:  What made you to decide listing the company and what is the current status of the IPO

 From the beginning, the only source of capital for our business has been bank funding. This has caused us to pay high interest on bank loans, especially during early years when borrowing rates were fairly high in the market. Unfortunately, interest rates have yet again started moving up in the recent past hence we want to diversify our funding options by having a higher level of equity capital in our capital structure. As a company in the SME category and being in its growth stage, we are unable to sacrifice much of our profits as interest payments to banks.

Secondly, our shareholders want to understand the market value of the company. Being a private limited liability company we cannot understand a market value however as a listed entity we are able to determine this based on the market price of a share in the secondary market.

We also believe as a listed entity we will have more visibility for our brand and most importantly our customers will feel confident to do business with us since the company is a listed entity, greater transparency on our business operations, financial performance and stability of the company will be revealed.

The Manager of our IPO is Atarah Capital Partners. In February 2021, I attended an Issuer forum conducted by Atarah Capital Partners, which was also attended by the CEO of the Colombo Stock Exchange. After listening to their presentations I was convinced that listing is a great option for our company.

Atarah Capital Partners has submitted the listing application to CSE and we are hopeful that the approval will be received soon.

 Q: What is the business model of the company?

Our main operations are focused on purchasing lands which have the potential to be developed and to be sold to the general public. The lands are purchased outright from the original owners and develop the land including surface preparation, block out the land, construction of roadways, construction of drain system and provide electricity/water facilities, etc. Sales commence after the completion of all development activities

In addition, we provide financial assistance towards clients who wish to purchase lands from us. We provide our special ‘Myland easy payment scheme’ and also arrange bank loan facilities to suit our customer needs.

Q:  What has been the recent performance of the company?

 We commenced business operations in March 2017, however during the FY2017 we were predominantly focused on identifying suitable lands in order to create a land bank. Thereafter, we made our first sale in FY2018, where the total year revenue was recorded as Rs. 66 million. In the following year (FY 2019), we recorded revenue of Rs. 160 million, which was an annual growth of 144%. During the said year, we started nine new projects.

FY 2020 was a challenging year for us. High market interest rates and Easter Sunday bomb attacks limited the company to outperform the revenues recorded in FY2019. The negative sentiment caused due to Easter Sunday attacks that occurred in April 2019 was a notable contributory factor for the general investing public’s reduced appetite for land investments. Despite the COVID 19 impact in the year 2020, where Sri Lanka went for a full lockdown for two-three months and additional partial district wise lockdowns, the company has been able to secure a total revenue of Rs. 168 million for the FY2021, which was a year-on-year growth rate of 38%.

We also achieved exponential revenues of Rs. 119 million for the first half of FY 2022, placing us on course approximately 40% earnings growth in FY 2022. This is amidst almost two-and-a-half month lockdowns due to the pandemic in 2021.

Q:  What are some of your plans for the immediate future?

 Rapid urbanisation will keep on increasing the demand for affordable lands, especially in Colombo and Gampaha Districts. These are our immediate target regions of focus. Thereafter we plan to provide our services to the rest of the regions in Sri Lanka.

Sri Lanka’s population is growing hence there will be demand for housing and the first step of a housing project of an individual is to purchase land at an affordable price from a convenient location. We understand this need very well hence our key business focus is to capitalise on the same.

We also notice demand for lands closer to entry points of expressways hence we plan to identify suitable lands for development targeting the need for easy access to Colombo and other suburbs, facilitated via expressway networks, both Central Expressway and the Airport Expressway.

Further, we notice that the general public usually considers investing spare cash in Land and property, which has much higher price appreciation potential and returns compared to a long term Fixed Deposits. We also plan to capitalise on this for our future business growth. 

 

Q: Tell us about your background and your team’s expertise in the real estate industry?

 I have over 22 years of experience in the real estate and construction industry. I also have exposure to a few other industries as an investor and an entrepreneur. I have been employed in several well-known real estate and construction related companies such as International Construction Consortium Ltd. (ICC), The Finance Company PLC, Ceylinco Selna Ltd. and Kelsey Developments PLC. I founded Myland Developments in 2017.

We also have an experienced management team who works with the overall objectives of the company. This team consists of people with long years of experience in the real estate and construction industry. Motivation and dedication of our team has contributed to the success of the company within a short period of time.