Vibrant AAFL goes for Rs.425mn IPO

Kumar · 1 Vibrant AAFL goes for Rs.425mn IPO Thu Nov 10, 2011 2:18 am

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November 9, 2011, 8:51 pm

By Mario Andree

Adhering to Central Bank regulations, debt free Asia Asset Finance Limited (AAFL) is making an initial public offering (IPO) of 170 million shares at Rs. 2.50 each to raise Rs. 425 million. The offer opens November 28 to December 15. The company, which made losses for years before a spectacular turn around, would be listed in the Dirisavi Board of the Colombo Stock Exchange.

With 120 million shares offered initially, the company expects to extend the number of shares by 50 million in case of an oversubscription.

AAFL Chairman Daya Muthukumarana told The Island Financial Review that the IPO was to comply with Central Bank regulations, and being a debt free company, the fund raised would be infused as working capital.

Ninety percent of the funds raised would be allotted in to its core businesses and 10 percent for branch expansion and product development with the company expected to open five new branches before the next financial year.

He said though the company had a tough time during global financial crisis, it had revamped itself and was now growing at 20 percent each year.

The allotment of shares would be under six categories giving the company’s employees and depositors 5 percent and 10 percent of the share issue respectively.

The current share holders of the parent company Asia Capital would be allotted 15 percent, 20 percent to major investors, 40 percent to retail investors and 10 percent would be allotted to unit trusts.

The company had a total asset base of Rs. 1.6 billion as at 31 March 2011, with Rs. 1 billion recorded in 2010, Rs. 948 million in 2009, Rs. 907 million in 2008 and Rs. 653 million in 2007.

The company net profit before taxation for the year ended 31st March was Rs. 79.6 million in 2011, after recording losses of Rs. 84 million in 2010, Rs. 175.5 million in 2009, Rs. 49.8 million in 2008 while the last profit recorded in 2007 with Rs. 13 million.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=38725

invest77 · 2 Re: Vibrant AAFL goes for Rs.425mn IPO Thu Nov 10, 2011 9:02 am

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I have not applied for IPO's recently but at Rs.2.50 I am looking positively at this IPO. what caught my eye in the prospectus is that;

AAFL is a debt free company. So they will not have to use IPO funds to clear debt.
90% of the funds go to profit generating activities through their core business activities.
I like the branch network, not many branches in western province but branches in key areas.
Loss making company has transformed to a profit making company with the change in the management.

The negative point could be the losses that were incurred in the last couple of years but now it has a 200% turnaround with 79 mil profits last year.

What do you guys think?

Aamiable · 3 Re: Vibrant AAFL goes for Rs.425mn IPO Thu Nov 10, 2011 9:54 am

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any other IPOS?

Chams123 · 4 Re: Vibrant AAFL goes for Rs.425mn IPO Fri Nov 11, 2011 2:08 pm

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Today all Registered Finance Companies and other financial institutions are facing severe competition from both existing and new players in the markets. I doubt whether AAFL can achieve their goals with the current volatile and highly competitive market?

What do you guys think about this?

invest77 · 5 Re: Vibrant AAFL goes for Rs.425mn IPO Sun Nov 13, 2011 11:04 am

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Chams123, This Should answer your question :-)

AAFL turns 360 degrees to face challenges in the financial sector
By Bandula Sirimanna
Asia Asset Finance Limited (AAFL), a registered finance company will introduce a novel 360 degrees concept to Sri Lanka’s financial sector with the aim of overcoming heavy competition within the industry and from the banking sector as well as further shrinking margins and tighter regulatory requirements.
Its Chief Executive Officer /Director Rajiv Gunawardena told the Business Times that the 360 degrees financial concept will involve the financial institution, its employees, customers and other stakeholders in developing new financial products and services. This type of innovation is perceived as the key to growth and competitive differentiation, he added.
The time is opportune for finance companies to think beyond deposit taking and traditional money lending and leasing as customer confidence is rapidly diminishing after the Golden Key and Sakvithi saga, he said.
AAFL decided to implement this concept to move away from traditional systems by introducing innovative financial solutions and product diversification. The “360 degrees concept” focuses on building the customer loyalty by not only providing credit facilities but also arranging means of generating higher revenue for customers for repayment of their loans. Further AAFL will add more value to its customer base not only by networking each other but also by creating more market opportunities for them.
“We now move to the next level where we add value to the customer base not only by networking each other but also by creating new markets/opportunities for them. This concept of networking customers with the other customers of AAFL data base will create a new “augmented product” with an enormous value addition to our customers. We believe this would create greater customer loyalty and value addition to the company, he said.

bakapandithaya · 6 Re: Vibrant AAFL goes for Rs.425mn IPO Sun Nov 13, 2011 2:56 pm

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Still they are thinking that share will be oversubscribed Question

Aro · 7 Re: Vibrant AAFL goes for Rs.425mn IPO Sun Nov 13, 2011 11:38 pm

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Worth to consider given the price .... Looks a good investment in the mid to long term ..... Should have significant retail buying interest

indyboy · 8 Re: Vibrant AAFL goes for Rs.425mn IPO Sat Nov 26, 2011 2:03 pm

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Let's see how well it does next week and then we can gauge the retail sentiment.

bakapandithaya · 9 Re: Vibrant AAFL goes for Rs.425mn IPO Sat Nov 26, 2011 2:42 pm

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Fools may apply for this ipo

Gaja · 10 Re: Vibrant AAFL goes for Rs.425mn IPO Sat Nov 26, 2011 3:09 pm

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its interested to note with this another 2 IPO's and the BOC debenture issue also coming, so how the next week market reaction to this!!!!!!!!!!!!!!!!!!!!!!