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By Indika Sakalasooriya
Expolanka Holdings’ Initial Public Offering (IPO) is back again in the news. This time it is not on the contentious sell down, but on the nature of the divestiture of two subsidiaries prior to the IPO.
Although Expolanka’s IPO-prospectus does not provide details about the buyers of the two subsidiaries, namely Expolanka Aviation and Denshun Industries—except, over Rs.300 million capital gain to the company—the information is now surfacing that the divestiture is in fact a related party transaction.
Although the news was not confirmed by any responsible officer/director of the Expolanka Holdings, a weekly newspaper quoting an unnamed source published a story saying that the two loss making subsidiaries were purchased by members of the Kassim family, and thus the sell down monies were re-invested in the company.
The Expolanka management yesterday confirmed to Mirror Business that the said divestiture was a related party transaction.
“If we had kept the two lost making companies within Expolanka Holdings, the equity of the company would have dipped, affecting prospective shareholders of Expolanka Holdings.”
They also said that, Expolanka Aviation in particular incurred huge losses during last few years, and they didn’t want Expolanka Holdings to be affected by its volatility.
“The Expolanka group decided to put forward an optimum investment portfolio to the public, in order to provide growth at moderate risk to ensure high returns for the capital employed. Hence business such as aviation which had a volatile & negative profitability and high risk were divested from the group,” Expolanka management said.
They further said that the divesture was a clean-up process. The reason for family members to buy them was that, the two companies, particularly Denshun carried some sentimental value.
“The transaction was carried out at an arms-length where the group was able to dispose a negative net worth company at a profit for the Expolanka Group, bearing in mind the best interest of the share holder base of Expolanka Holdings, which is taken for the IPO” they said.
Enlightening on the much criticized pre-IPO sell down by the directors, the management of the company noted that it took place during the early part of the Financial Year 2010/11, and was firmed up with the strategic investors in September for a price of Rs. 6.00 per share. The share price was determined, based on the Forecasted Earning for 2010/11 with the discounted multiple to the market.
“The IPO price was based on the Forecasted 2011/12 Earnings with almost same multiples with a 20% adjustment to the multiple, to account for the growth & liquidity of the share. Although there is an absolute difference in the price, the basis of the pricing has remained consistent with market fundamentals,” they said.
They also said the company has achieved significant growth over the last two years and has justified the conservativeness of the forecast over a period, and the future forecast has also been based on conservativeness.
Expolanka Holdings is to raise Rs. 2.4 billion by issuing 172 million ordinary voting shares at Rs. 14 each, with the IPO opening on May 12.
Expolanka, Akquasun to develop destination mgt network
Expolanka Holdings and AkquasunGroup based in Mumbai have announced their joint venture in the formation of Akquasun Lanka. Akquasun Lanka will be a component of the Transportation cluster of Expolanka which also includes Luxe Asia and Classic Travels. The intimate local market knowledge and commitment to world class services of Expolanka Holdings will be complimented by the global standing of Akquasun within the travel industry. A particular emphasis of Akquasun Lanka will be the development of the emerging inbound markets of India, Russia and China where they own and operate their own offices.
“Russia, China and India are huge markets; population density has always been there, but with newfound prosperity new travel trends have developed. With Akquasun Group’s presence and excellent customer service and our unparalleled knowledge of the Sri Lankan inbound tourism market, I am convinced Akquasun Lanka will become the market leader,” said Hanif Yusoof, Group CEO of Expolanka Holdings.
“Sri Lanka is a rapidly emerging market and we are thrilled about this partnership with Expolanka Holdings”,
said Aslam Rahim, Group Director of Akquasun Holidays. “Akquasun Group has achieved a “pioneering enterprise” in the travel trade in a very short space of time. Enriched with this wealth of experience and driven by the zeal of entrepreneurship, the company has expanded and diversified its network of operations to provide diversified travel solutions,” added Rahim.
Akquasun Group has offices in India, Mauritius, Maldives, Dubai, Singapore, Hong Kong, Macau, Russia and China and has a proven track record of success in both inbound and outbound tourism in all of these countries and are confident of replicating this success in Sri Lanka: “Being just a local tour distributor is fast becoming an outdated concept in the global travel market. Diversification is the key to progress, especially in the B to B sector” Rahim pointed out.
Both Yusoof and Rahim were keen to emphasise the importance of top level personalised service, which they feel will drive the new partnership. “We have employed agents who have both experience and fluency in Chinese and Russian. They have a better idea than anyone else of what our clients will expect from a trip to Sri Lanka and our aim is to make this trip as memorable and hassle free as possible”, concluded Chaminda Dias, Executive Director of Akquasun Lanka.
Expolanka Holdings is a leading diversified conglomerate in Sri Lanka with interests in transportation, manufacturing, international trading and strategic investments with an established presence in over 13 countries across the globe.
Expolanka Holdings’ Initial Public Offering (IPO) is back again in the news. This time it is not on the contentious sell down, but on the nature of the divestiture of two subsidiaries prior to the IPO.
Although Expolanka’s IPO-prospectus does not provide details about the buyers of the two subsidiaries, namely Expolanka Aviation and Denshun Industries—except, over Rs.300 million capital gain to the company—the information is now surfacing that the divestiture is in fact a related party transaction.
Although the news was not confirmed by any responsible officer/director of the Expolanka Holdings, a weekly newspaper quoting an unnamed source published a story saying that the two loss making subsidiaries were purchased by members of the Kassim family, and thus the sell down monies were re-invested in the company.
The Expolanka management yesterday confirmed to Mirror Business that the said divestiture was a related party transaction.
“If we had kept the two lost making companies within Expolanka Holdings, the equity of the company would have dipped, affecting prospective shareholders of Expolanka Holdings.”
They also said that, Expolanka Aviation in particular incurred huge losses during last few years, and they didn’t want Expolanka Holdings to be affected by its volatility.
“The Expolanka group decided to put forward an optimum investment portfolio to the public, in order to provide growth at moderate risk to ensure high returns for the capital employed. Hence business such as aviation which had a volatile & negative profitability and high risk were divested from the group,” Expolanka management said.
They further said that the divesture was a clean-up process. The reason for family members to buy them was that, the two companies, particularly Denshun carried some sentimental value.
“The transaction was carried out at an arms-length where the group was able to dispose a negative net worth company at a profit for the Expolanka Group, bearing in mind the best interest of the share holder base of Expolanka Holdings, which is taken for the IPO” they said.
Enlightening on the much criticized pre-IPO sell down by the directors, the management of the company noted that it took place during the early part of the Financial Year 2010/11, and was firmed up with the strategic investors in September for a price of Rs. 6.00 per share. The share price was determined, based on the Forecasted Earning for 2010/11 with the discounted multiple to the market.
“The IPO price was based on the Forecasted 2011/12 Earnings with almost same multiples with a 20% adjustment to the multiple, to account for the growth & liquidity of the share. Although there is an absolute difference in the price, the basis of the pricing has remained consistent with market fundamentals,” they said.
They also said the company has achieved significant growth over the last two years and has justified the conservativeness of the forecast over a period, and the future forecast has also been based on conservativeness.
Expolanka Holdings is to raise Rs. 2.4 billion by issuing 172 million ordinary voting shares at Rs. 14 each, with the IPO opening on May 12.
Expolanka, Akquasun to develop destination mgt network
Expolanka Holdings and AkquasunGroup based in Mumbai have announced their joint venture in the formation of Akquasun Lanka. Akquasun Lanka will be a component of the Transportation cluster of Expolanka which also includes Luxe Asia and Classic Travels. The intimate local market knowledge and commitment to world class services of Expolanka Holdings will be complimented by the global standing of Akquasun within the travel industry. A particular emphasis of Akquasun Lanka will be the development of the emerging inbound markets of India, Russia and China where they own and operate their own offices.
“Russia, China and India are huge markets; population density has always been there, but with newfound prosperity new travel trends have developed. With Akquasun Group’s presence and excellent customer service and our unparalleled knowledge of the Sri Lankan inbound tourism market, I am convinced Akquasun Lanka will become the market leader,” said Hanif Yusoof, Group CEO of Expolanka Holdings.
“Sri Lanka is a rapidly emerging market and we are thrilled about this partnership with Expolanka Holdings”,
said Aslam Rahim, Group Director of Akquasun Holidays. “Akquasun Group has achieved a “pioneering enterprise” in the travel trade in a very short space of time. Enriched with this wealth of experience and driven by the zeal of entrepreneurship, the company has expanded and diversified its network of operations to provide diversified travel solutions,” added Rahim.
Akquasun Group has offices in India, Mauritius, Maldives, Dubai, Singapore, Hong Kong, Macau, Russia and China and has a proven track record of success in both inbound and outbound tourism in all of these countries and are confident of replicating this success in Sri Lanka: “Being just a local tour distributor is fast becoming an outdated concept in the global travel market. Diversification is the key to progress, especially in the B to B sector” Rahim pointed out.
Both Yusoof and Rahim were keen to emphasise the importance of top level personalised service, which they feel will drive the new partnership. “We have employed agents who have both experience and fluency in Chinese and Russian. They have a better idea than anyone else of what our clients will expect from a trip to Sri Lanka and our aim is to make this trip as memorable and hassle free as possible”, concluded Chaminda Dias, Executive Director of Akquasun Lanka.
Expolanka Holdings is a leading diversified conglomerate in Sri Lanka with interests in transportation, manufacturing, international trading and strategic investments with an established presence in over 13 countries across the globe.
