Access Engineering IPO to raise 500 m for construction project

 By Dinali Goonewardene

Access Engineering Ltd. (AEL) recently launched its initial public offering to raise Rs. 500 million offering of 20 million ordinary shares at Rs. 25 each.

The issue will raise funds to build five 12 storey-buildings in Colombo 15 on a project being undertaken for the Urban Development Authority.

The balance funds required for the project will be met through bank borrowings and internally generated funds.

The company, which is a part of the Access Group, owning Access Towers in Colombo 2, was formed 10 years ago and its product portfolio includes roads and highways, bridges and flyovers, water and wastewater, harbours and marine work, dredging and reclamation, telecommunication infrastructure, irrigation and land drainage, environment and waste management, buildings and investment projects.

The company made a profit of Rs. 935.8 million in 2011, 13.3% growth over the previous year and recorded a 16% increase in turnover to Rs. 3.5 billion. Its Return on Equity was 26.8% in 2011. The net asset value was Rs.5.43 and the price earnings ratio in 2012 is 12.2 times compared to a market PE of 14.2. The company goes to market at the same price as its Rs. 4.5 billion private placement in June last year.

The Government of Sri Lanka has an extensive development agenda in place which will include Rs. 269 billion investments in roads and transportation from 2010-2012, according to Ministry of Finance and Planning projections, which includes an upward trend in overall budget allocations for roads and highways.

The Government intends to promote infrastructure development through public private partnerships. The company’s other clients include JBIC and the Chinese Government and officials said it sees prospects in planned private sector investment in the leisure sector.

The IPO will see AEL obtain a listing on the Diri Savi Board and be one of the top 20 companies in terms of market capitalisation. The company will have a public float of 36% and company officials said it would graduate to the main board of the CSE after June 2012.