Vallible ONE vs Browns Investment (A Quick Comparisons of IPOs)

factFINDER

factFINDER

Manager - Equity Analytics

Posts : 158
Equity Stars : 5344
Reputation : 41
Join date : 2010-05-27
Age : 45
Location : Colombo

Vallible ONE vs Browns Investment (Comparisons of IPOs)
At a glance .... highlights from the PROSPECTUS.!!

Issue Price
BROWNS INVESTMENTS (BI)
Promoters/Controlling shareholders (issued Nov 2008 - March 2010) @1/- (52.7%) i.e. Browns & Co PLC 26.34% & Teprobane Holdings 26.34%
Private Placement @5/- (44.6%)
IPO @5% (2.7%)

VALLIBLE ONE (VO)
Promoter/controlling shareholder @25/- (80%) i.e. KDD Perera (63.08%), Velilibel Investments (8.46%), Vellibel Leisure (8.46%)
Private Placement @25/- (18.04%)
IPO @25% (1.96%).

Basic Investment ratios (@IPO price)
NAPS
Vellibel ONE -post-IPO Aprox 25.15 (P/BV 0.99)
BROWNS INVESTMENTS -Post-IPO –Aprox. 4.46 (P/BV 1.12)

Business profile

Vellibel ONE -
Manufacturing
Royal Ceramic Group (51%)
Include
Royal Porcelain (100%), Rocell Bathware (100%), Royal Ceramic Distributors (100%)

Financial Services
LB Finance PLC (51%)
Sampath Bank (15%) – the largest Shareholder

Leisure
Greener Water Ltd (100%) – being constructed
Waskaduwa Beach Resort Ltd – 20% (an Associate Company)

Mini - Conglomerate
Delmage & Forsyth Co Ltd (51%) –
With more than 10 subsidiaries involved in Transportation (Air/shipping/Freight Forwarding), Travel & Tourism, Insurance Broking, Trading (FMCG, Import/Export, and Distribution), home and medical appliances … etc.

BROWNS INVESTMENTS (BI)
Plantation & Power
Joint Control entity – Free Lanka Capital (50%) owns Free Lanka Capital Holdings (FLCH) (54.65%) effective holding of BI in FLCH about 30%.
Free Lanka Capital Holdings (FLCH) has controlling stakes (directly and indirectly) in Hydro Power Free Lanka PLC owns mini hydro plants , and Mathurata Plantations Ltd and Pussellawa Plantations Ltd two of Regional Plantation companies.

Leisure
Samudra Beach Resorts (Pvt) Ltd – (100%) – A Luxury Hotel to be constructed
An Associate Company - LOLC Leisure Ltd (30%) owns controlling stakes in
Tropical Villas (Pvt) Ltd., Club Palm Garden Hotel PLC, Eden Hotels Lanka PLC,
Joint Control entity – Tea Leaf Resort Holdings (controls FLCH & Sierra)

Manufacturing
An Associate Company - Taprobane Capital (Pvt) Ltd (39.67%) – owns 68.95% of Royal Fernwood Porcelain Ltd (RFPL). Effective holding of BI in RFPL is about 27%.

Other Investments
Sierra Holdings (Pvt) Ltd - Minor Holdings (10%), which owns 58% of Sierra Cables Plc, 51% of Agstar Fertilizers (pvt) Ltd and 48% of Sierra Constructions (Pvt) Ltd
Sierra Constructions (Pvt) Ltd - Minor Holdings (10%)
Agstar Fertilizers (pvt) Ltd - Minor Holdings (10%)

Please share your observations ....... Idea

factFINDER

factFINDER

Manager - Equity Analytics

Posts : 158
Equity Stars : 5344
Reputation : 41
Join date : 2010-05-27
Age : 45
Location : Colombo

Here are my personal observations/opinions;

ISSUE PRICE :
Though the price of PPs & IPOs are similar, in BROWNS INVESTMENTS the controlling stake (52.7%) was issued at 1/- per share (IPO for 5/-). But in Vellibel ONE even the controlling stake (80%) was issued at the same 25/-.
Therefore IPO price of Vellibel ONE is more favorable for minority shareholders.

RATIOS
IPO price of Vellibel ONE is at discounted to its NAPS of 25.15 and P/BV 0.99.
However IPO of BROWNS INVESTMENTS is slightly (12%) premium to the NAPS of 4.46 and P/BV is at 1.12.
The IPO price Vellibel ONE is more attractive than BROWNS INVESTMENTS.

INVESTMENT PROFILE
By looking at each of their Investments, its appears that Vellibel ONE is aiming to be another Conglomerate like JKH and Heyleys. They already having controlling stakes in major players in Manufacturing /Tile, Financial Services, Trading/FMCG and have laid strong foundation for Leisure, they already decided to invest in Power Sector as well. Also they have already showed their appetite for aggressive expansion by acquisition with Dhammika/Nimal combination.

Whereas BROWNS INVESTMENTS has opted to hold minor or indirect stakes in diversified business interests specially Plantations, Power and Leisure, where the connected parties (i.e. LOLC, Perpetual, Teprobane , Browns …. Etc) hold the control. They don’t have controlling stakes in any entity other than in the proposed hotel of Samudra Beach Resorts (Pvt) Ltd. It will be more interesting to watch the journey of BROWNS INVESTMENTS independently - than being a supporting arm to connected entities.

No doubt we should apply for both IPO's; BROWNS INVESTMENTS (BI) Vellibel ONE (VO), but BROWNS INVESTMENTS has to signal their strategic direction without delay...

Welcome all others observations/comments .....

wgsaman

wgsaman

Senior Manager - Equity Analytics

Posts : 348
Equity Stars : 5235
Reputation : 48
Join date : 2011-05-20
Age : 33

MoneyLover

MoneyLover

Manager - Equity Analytics

Posts : 140
Equity Stars : 4908
Reputation : 38
Join date : 2011-06-19

@FACTfinder - comparison of two recent IPOs, a good work "+ rep" from me. Smile

but, may not fully agreeable with some of your observations.

We should not always expect to offer at the same rate that promoters invested in a venture. True, Mr. Dhammika Perera and all others has invested in the same price of 25/- which is favorable while promoters of BI invested 1/- while others at 5/-. Also IPO at P/BV of 1.12 is not bad at all. Since it's the controlling stake it is not unfair to guess those shares won't be dumped. But cases of Softlogic and Expo were extrems.

Also, I don't think both VO and BI should drive towards the same direction nor every company should end up becoming a diversified holding company like JKH or Heyleys. May be VO want to become diversified holding company while BI want to become a Investment Trust or venture capital company.
However as you emphasysed if BI's role is backing connected parties to gain control in entities without direct benifit is a disaster.

Anyway I'll subscribe for Browns Inv IPO as well. It's more attrective than Softlogic and Expo to me. (may be Vallibel is the most attarective).

Sponsored content

Name*:
Phone number:
Email address*:
Comments*:
* - required fields	Learn

Name*:
Phone number:
Email address*:
Comments*:
* - required fields	Learn

Latest topics

Vallible ONE vs Browns Investment (A Quick Comparisons of IPOs)

1 Vallible ONE vs Browns Investment (A Quick Comparisons of IPOs) Sun Jun 19, 2011 1:10 pm

factFINDER

2 Re: Vallible ONE vs Browns Investment (A Quick Comparisons of IPOs) Sun Jun 19, 2011 1:24 pm

factFINDER

3 Re: Vallible ONE vs Browns Investment (A Quick Comparisons of IPOs) Sun Jun 19, 2011 2:00 pm

wgsaman

4 Re: Vallible ONE vs Browns Investment (A Quick Comparisons of IPOs) Tue Jun 21, 2011 11:01 pm

MoneyLover

5 Re: Vallible ONE vs Browns Investment (A Quick Comparisons of IPOs)

Sponsored content

New topics