Monday Sep 16, 2024
Monday Sep 16, 2024
Monday, 4 November 2019 00:12 - - {{hitsCtrl.values.hits}}
In what could be described as the biggest equity fundraiser in the sector Lanka Realty Investments PLC has announced a Rights Issue to mobilise Rs. 3.6 billion.
On Friday, its Board resolved to issue 96.7 million shares by way of a Rights Issue on the basis of one for two at Rs. 37.50 per share. Its current stated capital is Rs. 6.379 billion represented by 193.48 million shares. The company’s stock last traded at Rs. 41.10 on Friday.
Around 83% of the company’s shareholding is held by high networth foreign investors (Terry Smith, Ian McVeigh, Piers Morgan and Joint Managing Director Archie Warman) whilst the biggest local shareholder is the Joint Managing Director Hardy Jamaldeen with a 14% stake.
The Rs. 3.6 billion to be raised to part settle (Rs. 1.8 billion) of debt obligations of identified subsidiary companies; Rs. 900 million to acquire income yielding commercial assets, Rs. 450 million to develop existing properties held by two subsidiary companies and Rs. 477.7 million in fresh investments in the real estate sector.
The Rights Issue is subject to regulatory and shareholder approval.
A company spokesman said the move would ensure a wider investor base and enhance liquidity of the stock.
In August, Lanka Realty Investments (LRI) concluded the largest acquisition share swap worth Rs. 5.6 billion. This move boosted LRI’s Group asset base has increased to Rs. 10 billion from Rs. 2 billion as at end June.
In October 2017, LRI which has operations spanning over five decades, was acquired by a consortium of British and Sri Lankan investors with the aim of becoming the largest real estate company listed on the Colombo Stock Exchange.
Subsequent to the acquisition, LRI carried out a rights issue raising Rs. 632.9 million in October 2018 and completed a Rs. 5.6 billion share swap for the acquisition of the entire shareholding in six privately-held companies which have exposure to the commercial property, affordable housing and tourism and leisure sectors, thereby expanding the Group’s overall real estate exposure.
Through the Share Swap LRI issued 149,179,853 ordinary voting shares of the company at an issue price of Rs. 37.52 per share to the shareholders of the six private companies in return for their shares in these six companies.
Post the Share Swap, LRI group has 11 subsidiaries and three sub-subsidiaries with business interests in commercial property, affordable residential property, real estate land banks, leisure and manufacturing.
The Group holds 8.4 acres of freehold land in Colombo with planning permission for the development of 1,649 residential units, a circa 100,000 sq. ft office building in Colombo 10, three operational boutique hotels and villas in Colombo, Weligama and Ahangama with 44 rooms, two leisure sector development projects under construction for 30 rooms in Yala and 53 rooms in Ambalangoda and two companies operating in the manufacture of construction material.
The recently-concluded acquisition is expected to boost foreign investor interest in LRI due to the opportunity it provides by acting as a platform for foreign investors to participate in real estate investments in Sri Lanka which is restricted in unlisted companies as per the Land (Restrictions on Alienation) (Amendment) Act No. 21 of 2018.
Furthermore, the blend in terms of operational, development and land banked assets is expected to further enhance returns to the investors in the LRI Group.
