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The diversified blue chip with interest in aluminium manufacturing paid above market Rs. 23 per share for the stake amounting to 7.318 million. Alufab closed the day at Rs. 23.70, up by Rs. 4.70 or 25% topping the gained list with 9.78 million shares traded.
Swedish-based shareholders Chairman Johan Claesson and Director Victor Press were the main sellers in the deal structured by Adl Cpaital Ltd. As at 30 June 2014, the duo held 60.7% with equal holding by Claesson and Metro Incentives Inc, in which Press is an associate.
“Our clients, Johan Claesson and Victor Press, were both of the opinion that Alufab needed a strong local partner to drive the company and to ‘take it to the next level’. Given that they were located in Sweden, they did not believe they could fully leverage the opportunities that the construction boom was offering Alufab,” Adl Capital Managing Director and CEO Ishrat Rauff said.
“This latest transaction is the culmination of a restructuring exercise of the company that commenced with a Rights Issue in 2011, a project that Adl Capital was also mandated with managing. Whilst the Rights Issue led to a cash infusion of around Rs. 300 million and provided the company with a financial base to target larger projects, it needed a fresh impetus via a strong and reputable local partner,” Ishrat said.
Alufab Plc has a well established presence in the aluminium fabrication sector of the fast-growing construction industry. Some of its major projects handled include the customs’ headquarters and Kingsbury Hotel.
In FY14, Alufab turnover was Rs. 98.6 million, up by 32% but suffered a loss of Rs. 18 million, though down from Rs. 51 million loss in FY13. In 1Q of FY15, turnover was down by 19% to Rs. 23 million whilst loss was Rs. 2.3 million. Its net asset per share is Rs. 28 as at June 2014. In the June quarter, the highest price for its share was Rs. 18, and lowest was Rs. 13 as against Rs. 20.80 and Rs. 16.20 respectively a year earlier. Its 52-week high was Rs. 21.80.
“The number of high-rise buildings in the country is rapidly increasing and the current facelift that Colombo is undergoing would eventually give rise to more modern buildings. Alufab operates in this fast growing sector, which augurs well for the future of the company,” opined Salahudheen Halaldheen, a Senior Manager of Adl Capital Limited, who was actively involved in the transaction from its initial stages up to fruition.
The duo will retain a stake in the company and will continue to remain on the Board of Alufab. They have advanced around Rs. 40 million to the company in recent years against a proposed capital issue made by the company. Additionally Claesson has lent Rs. 14.8 million to the company and an institutional-related party had extended a further Rs. 20.5 million.
Public holding of Alufab is 38% and there are a host of individual shareholders in the top 20 list.
With yesterday’s purchase, Hayleys will make a mandatory offer shortly to acquire the balance shareholding.
For Hayleys according to analysts, the Alufab acquisition is strategic apart from it seeing huge upside in the aluminium fabrication business with construction boom in the country Alufab tops percentage gainers list with 25%
Hayleys which saw its share price drop by Rs. 2.60 last week and by Rs. 8 on Tuesday, shot up yesterday as market cheered the acquisition. It hit an intra-day high of Rs. 354 before closing at Rs. 352.50, up by Rs. 11.80.
Hayleys Group acquired Alumex in 2010 and took it public with a Rs. 838 million IPO early this year. Alumex was first acquired by Dhammika Perera, for controls Hayleys, for Rs. 2 billion in 2010. Alumex’ net asset per share is Rs. 5 as at June 2014. Hayleys Group own 55% stake in Alumex whilst other major shareholders are Rosewood Ltd., (10%), Akbar Brothers (9.8%) and Star Pack (5%)
Dhammika also has 29% stake in Lanka Aluminium.
Alumex Group holds over 50% of the local market share. Other major player Lanka Aluminium Plc.
Demand for aluminium in Sri Lanka is anticipated to grow more than 50% by 2019 according to industry experts. Around 10% of architectural extrusions are imported due to the non availability of aluminium proprietary system in Sri Lanka but some companies including Alufab and Alumex have established licencing deals with globally renowned manufacturers.
