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Around 13 Sri Lankan private companies are preparing to go public this year, Colombo Stock Exchange (CSE) officials say.
“These are in many different sectors and they will list on the CSE in a few months,” a CSE official told the Business Times on the sidelines of an issuer relations forum held recently in Colombo to expose the IT-BPO and ‘Knowledge Service Industry’ to the benefits of listing on the CSE. It was hosted by CSE and the Securities and Exchange Commission (SEC) in association with the Sri Lanka Association of Software and Service Companies (SLASSCOM).
The forum saw over 100 CEOs and Chief Financial Officers of unlisted potential issuer companies within the industry participate. Rajeeva Bandaranaike, CEO, CSE said that the CSE is willing to consider a ‘separate set of criteria’ for listing IT-BPO firms on the CSE. “We are discussing a separate trading board for SMEs and similarly we’d also like IT-BPO firms to go public and in this respect we can discuss for them,” he said, adding that criteria for SMEs to list and a separate board for these units, is still at a preliminary stage. The CSE and the SEC are already working with the Board of Investment (BoI) for a separate board called the BoI Board to facilitate BoI firms to go public.
Mr. Bandaranaike said that a successful listing where the issuer receives a fair price for the shares and at which the investor generates solid returns, coupled with a good relationship between the two parties, often translates into the company being able to raise fresh capital for the next phase of growth at later dates at a higher valuation multiple (through rights issues, further listings and listed debt, etc).
High visibility, transparency, and enhanced liquidity enable a listed company to attract high-quality shareholders, such as institutional and strategic investors, on to its shareholder register, he said, adding that building relationships with such potential strategic partners helps the company to take on investments beyond the capacity of internally generated free cash flow, enabling growth at an unprecedented pace and perhaps in directions not previously envisaged.
A common misconception that listing on the stock exchange was merely a tool for raising capital was dispelled by him. “Listing on the stock exchange brings with it a number of benefits, in addition to the raising of capital. A company is able to enhance its corporate profile through visibility, attribute an objective value to the company, obtain tax incentives and create an optimal capital structure. There is also a people centric focus in going public, since it enables a company to align the interests of shareholders, management and employees, while attracting strategic investors,” he said.
Finally a listing is an ideal means of sustaining business continuity, since it acts as alternative currency for acquisitions and mergers, increases liquidity and provides you with the option of returning to the market to fund the next phase of growth for your company Mr. Bandaranaike said, in his presentation, “Benefits of Listing”.
“As the IT/BPM industry is going through a fast phased growth, we are delighted to partner with CSE to bring a whole new sector to the local stock exchange. Most mature markets have a very vibrant technology sector and we are glad to be able to take the first steps in creating the path for the same in Sri Lanka,” Chairman SLASSCOM Madu Ratnayake said.
“The country seeks to project itself as a knowledge hub and therefore the development of the IT services industry is vital. By listing on the stock wxchange IT companies are able to better strengthen their internal structures and become more attractive to potential strategic investors who would value transparency and governance,” Deputy Director General and Officer-in-Charge-SEC Dhammika Perera said.
“These are in many different sectors and they will list on the CSE in a few months,” a CSE official told the Business Times on the sidelines of an issuer relations forum held recently in Colombo to expose the IT-BPO and ‘Knowledge Service Industry’ to the benefits of listing on the CSE. It was hosted by CSE and the Securities and Exchange Commission (SEC) in association with the Sri Lanka Association of Software and Service Companies (SLASSCOM).
The forum saw over 100 CEOs and Chief Financial Officers of unlisted potential issuer companies within the industry participate. Rajeeva Bandaranaike, CEO, CSE said that the CSE is willing to consider a ‘separate set of criteria’ for listing IT-BPO firms on the CSE. “We are discussing a separate trading board for SMEs and similarly we’d also like IT-BPO firms to go public and in this respect we can discuss for them,” he said, adding that criteria for SMEs to list and a separate board for these units, is still at a preliminary stage. The CSE and the SEC are already working with the Board of Investment (BoI) for a separate board called the BoI Board to facilitate BoI firms to go public.
Mr. Bandaranaike said that a successful listing where the issuer receives a fair price for the shares and at which the investor generates solid returns, coupled with a good relationship between the two parties, often translates into the company being able to raise fresh capital for the next phase of growth at later dates at a higher valuation multiple (through rights issues, further listings and listed debt, etc).
High visibility, transparency, and enhanced liquidity enable a listed company to attract high-quality shareholders, such as institutional and strategic investors, on to its shareholder register, he said, adding that building relationships with such potential strategic partners helps the company to take on investments beyond the capacity of internally generated free cash flow, enabling growth at an unprecedented pace and perhaps in directions not previously envisaged.
A common misconception that listing on the stock exchange was merely a tool for raising capital was dispelled by him. “Listing on the stock exchange brings with it a number of benefits, in addition to the raising of capital. A company is able to enhance its corporate profile through visibility, attribute an objective value to the company, obtain tax incentives and create an optimal capital structure. There is also a people centric focus in going public, since it enables a company to align the interests of shareholders, management and employees, while attracting strategic investors,” he said.
Finally a listing is an ideal means of sustaining business continuity, since it acts as alternative currency for acquisitions and mergers, increases liquidity and provides you with the option of returning to the market to fund the next phase of growth for your company Mr. Bandaranaike said, in his presentation, “Benefits of Listing”.
“As the IT/BPM industry is going through a fast phased growth, we are delighted to partner with CSE to bring a whole new sector to the local stock exchange. Most mature markets have a very vibrant technology sector and we are glad to be able to take the first steps in creating the path for the same in Sri Lanka,” Chairman SLASSCOM Madu Ratnayake said.
“The country seeks to project itself as a knowledge hub and therefore the development of the IT services industry is vital. By listing on the stock wxchange IT companies are able to better strengthen their internal structures and become more attractive to potential strategic investors who would value transparency and governance,” Deputy Director General and Officer-in-Charge-SEC Dhammika Perera said.
