Friday, 13 March 2015 01:46
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The first Initial Public Offer for 2015, Singhe Hospitals’ Rs. 250 million IPO, opened officially yesterday.
The company is offering 25% stake to the public or 100 million shares valued at Rs. 2.50 per share.
The company is a BOI approved project with a five-year tax holiday. The main purpose of the IPO is to list the company on the Colombo Stock Exchange’s Diri Savi Board and allow the public to participate in the equity of a start-up hospital and the reap the benefits later.
From the Rs. 250 million funds raised Rs. 140 million will be used to part settle the loans obtained from Bank of Ceylon and Rs. 30 million to settle the Bank Overdraft facility. This will enhance earnings per share and the net asset value of the company with 100% savings due to tax-free BOI project. Another Rs. 80 million will be used for expansion of business and capital expenditure.
In terms of the capital expenditure, a laparoscopy machine and a mammography machine will be purchased for Rs. 17 million. In terms of expansion, micro labs will be setup in Balangoda, Avissawella and Embilipitiya for Rs. 26 million. Further, an eye surgical unit at a cost of Rs. 12 million and a car park for Rs. 10 million will be built at the hospital premises. In terms of pharmacy and lab stocks, the company intends to use Rs. 15 million in the post IPO era.
Singhe Hospital was incorporated on 16 December 2009 as BOI approved project and commercial operations commenced in June 2012. It is the only private hospital with modern facilities in the Ratnapura District with 50 beds to accommodate inpatients.
Services offered at the hospital includes 24 Hour OPD services, X-ray facility and pharmacy. Further a dental unit, CT scanning facilities, paediatric ward, specialist consultancy, intensive care, 24 laboratory services and ultrasound scanning are some of the services available at the hospital.
The vision of the company is to provide the safest, highest quality healthcare and be the preferred health service provider to the nation. Going forward the company will be working towards those objectives set and in the post IPO era towards the stated objectives.
As per the share valuation prepared by BR De Silva & Co. Chartered Accountants included in the prospectus for prospective investors, free cash flow valuation stood at Rs. 2.59 per share whilst the price to book value valuation stood at Rs. 1.73 per share. It is a positive note to evaluate considering the independent valuations carried out by an external party.
A.M. Weerasinghe, Chairman and main shareholder with 74.7% holding post IPO of Singhe Hospitals Ltd., was the founder of Royal Ceramics Lanka PLC in 1990 and has been involved in real estate, constructions and transportation industries. He acts as the Chief Executive Officer of the company.
Merchant Bank of Sri Lanka & Finance PLC’s investment banking and business advisory division has been a pioneering many initial public offers since its inception in 1982. IPOs for many large corporates such as Laugfs Gas PLC, Royal Ceramics PLC, Chevron Lubricants PLC, Nawaloka Hospitals PLC and Janashakthi Insurance PLC were some of the key milestones.
Similarly, in terms of debt issues, Bank of Ceylon, L B Finance PLC, Commercial Credit & Finance PLC, Alliance Finance Co. PLC, Regional Development Bank and Arpico Finance PLC. Sri Lankan Catering Ltd. was one of the key foreign currency debt issues that were offered for fixed income securities investors by Merchant Bank of Sri Lanka & Finance PLC in 2010.
