Lucky Lanka Milk’s Rs. 300 m IPO oversubscribed with regional promotions
Tuesday, 15 July 2014 00:38
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Merchant Bank of Sri Lanka PLC acting as the Managers to the IPO was able to oversubscribe the Lucky IPO indicating the investor confidence on IPOs presented by Merchant Bank of Sri Lanka PLC, Corporate Advisory & Capital Markets.
Lucky Lanka Milk Processing Company Ltd raised more than LKR300Million via an Initial Public Offer. The Initial offer was 38,000,000 ordinary voting shares at a price of LKR6.00 and 24,000,000 ordinary non-voting shares at a price of LKR3.00. The ordinary voting shares are 21% of the Company, the only portion not locked-in according to the regulations. The shares will be listed on the Diri Savi Board of the Colombo Stock Exchange. The final launch was conducted at Cinnamon Grand – Colombo along with Colombo Stock Exchange branches in Matara, Kurunegala, Kandy and Negombo and network of farmer unions and retailers of the Company was the key to success.
The Voting shares were oversubscribed with a reasonable margin whilst the Non-Voting shares was oversubscribed almost by three (03) times indicating a high demand. The key aspect to note in the IPO is, new investors to the Colombo Stock Exchange especially from the rural area spreading investment opportunities outside Colombo. Approximately 500 new accounts were opened out of a circa 3500 applications received.
Out of the proceeds, LKR200Mn will settle the high cost borrowings, which in turn is expected to boost the net profits immediately. For the year ended 31 March 2014, the Company made a profit of LKR21Million after incurring a finance cost of LKR60million; this is expected to reduce significantly in the FY2015 with the debt settlements. LKR75Mn will fund the expansion of the existing production plant with new cold room complex with an ammonia refrigeration system, extension to the existing UHT milk processing building and new machinery including conveyer systems & pigging systems. The remaining LKR25Mn will be utilised for new projects such as Gedarata Kiri, Milk Bar Outlet and School Canteen with Milk Sales Centres that are underway especially in the Colombo region.
Lucky began its life in 1991 as a domestic business with the excess milk of the household cows. The present Chairman, Mr. Lal Keerthi Gunawardhana then at the age of 20 started this business with the support of his family members. Today, the Chairman has made a strategic tie-up with GOA family of Singapore for extension of the products to other Asian countries.
Moreover, the Company operates in the Western (35% of sales), Southern (36% of sales) and Central (29% of sales) provinces in the country. The revenue for 2014 marked LKR 896.5 Mn compared to LKR 841.8 Mn in 2013 with an asset base over LKR 750 Mn. Corporate Advisory & Capital Markets division of Merchant Bank of Sri Lanka PLC acts as the Investment Banking Advisors to the issue whilst and Bank of Ceylon is the Bankers to the issue.
