Nimal, RCL venture into stock broking; to buy control of New World Securities

High net worth investor Nimal Perera is entering into the stock broking industry together with Royal Ceramics Plc (RCL), via a deal to buy 51% control of New World Securities Ltd.

Nimal will be acquiring a 32% stake under his personal account whilst RCL will take up a 19% stake, in a move which is described as a “strategic alliance” as part of a shareholding restructuring at New World Securities (NWS).

The broking firm, set up in March 2011, is controlled by a consortium of Japanese investors-led by Takashi Igarashi.

Entry of Nimal and RCL is by way of enhancing capital with issuance of new shares.

The deal is pending approval from the Securities and Exchange Commission (SEC) and the Colombo Stock Exchange (CSE). NWS is a trading member of the CSE.

Nimal told the Daily FT that NWS would be repositioned as a boutique broking house. He also said that under the new control, NWS hoped to derive benefits from synergies of Pan Asia Bank, LB Finance and Vallibel Finance, all within the financial services industry, as well as several other companies which have strong connections.

Apart from being the Managing Director of RCL, Nimal is also the Chairman of Pan Asia Bank, which has been a party to increased Japanese investments into Sri Lanka’s Government bonds promoted by NWS Holdings, which includes NWS Management Services and NWS Financial Services.

NWS, among a community of 28 brokers, has been active in promoting the market among both retail and high net worth investors whilst having a branch in Anuradhapura. Given its Japanese connections, NWS had also broken new ground by holding road shows in Tokyo in 2011 and 2012.

RCL’s interest in NWS comes hot on the heels of it recently divesting a 51% stake in Asia Siyaka Commodities to Lanka Commodity Brokers for Rs. 371 million, above Rs. 34 million from the original purchase price paid early last year.

Despite the purchase originally with perceived synergies given RCL’s connections with plantations-rich Hayleys Plc, the new acquisition hadn’t benefitted as envisaged. The exit as per analyst will benefit RCL considerably going forward, apart from commodity broking not being part of its core business.

Unlike the 51% stake in Asia Siyaka, in the stock broking entity RCL has a 19% shareholding, which is less than an associate stake, hence will be treated as an investment.