Reuters - Softlogic says to raise $36 mln through IPO in June

Reuters - Softlogic says to raise $36 mln through IPO in June

http://in.reuters.com/article/2011/05/23/softlogic-ipo-idINL3E7GN0WV20110523

INTERVIEW-Sri Lanka's Softlogic says to raise $36 mln through IPO in June

COLOMBO | Mon May 23, 2011 12:39pm IST

May 23 (Reuters) - Sri Lankan conglomerate Softlogic plans to raise 4 billion rupees ($36.4 million) through an initial public offering in June, the company's chairman said on Monday.

"In terms of IPO, we are raising 4 billion rupees and it has been approved by Colombo Stock Exchange and shares will be priced at 29 rupees each," Ashok Pathirage, the chairman and managing director of Softlogic told Reuters in an interview.

"Most of the (IPO) money will be used for retiring short term debts. We have already done some financing pending the IPO. We have purchased hotels and a stake in Asiri Hospital . So we will pay all that with the IPO funding."

Softlogic, which is selling 137.9 million shares or 17 percent of the company, is the exclusive distributor for Nokia handsets and Dell computers in Sri Lanka.

It also has operations in information and communication 7technology, healthcare, retail, auto mobile, leisure, and financial sectors. (Reporting by Shihar Aneez; Editing by Lincoln Feast)

seems to me another over valued IPO

If they're using most of the IPO money to retire debt.
Growth will be restricted.

Update on SoftLogic IPO from Reuters

http://in.reuters.com/article/2011/05/23/softlogic-ipo-idINL3E7GN11320110523
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INTERVIEW-UPDATE 1-Softlogic to raise $36 mln via biggest Lanka IPO in 6 yrs

* Largest Sri Lankan IPO since July 2005

* Selling 137.9 million shares at 29 rupees a share

* Most IPO money will be used to retire short-term debt (Adds comments, quotes from interview, background)

By Shihar Aneez

COLOMBO, May 23 (Reuters) - Sri Lankan conglomerate Softlogic plans to raise 4 billion rupees ($36.4 million) through an initial public offering in June, the biggest in the island nation in six years.

The information technology-led diversified firm is selling 137.9 million shares or 17 percent of the company, which is the exclusive distributor for Nokia handsets and Dell computers in Sri Lanka.

"In terms of IPO, we are raising 4 billion rupees and it has been approved by Colombo Stock Exchange and shares will be priced at 29 rupees each," Ashok Pathirage, the chairman and managing director of Softlogic, told Reuters in an interview on Monday.

The IPO, the biggest in the $50 billion economy since top mobile firm operator Dialog Axiata listed in July 2005, will help to retire some short-term debt and expand the firm.

"Most of the (IPO) money will be used for retiring short-term debts. We have already done some financing pending the IPO. We have purchased hotels and a stake in Asiri Hospital. So we will pay all that with the IPO funding."

Softlogic also has operations in healthcare, retail, automobile, leisure and financial sectors with expansion plans for almost all sectors on the cards.

The firm is also the sole distributor for some of the world renowned brands such as Panasonic, Samsung, Levis, and Nike in Sri Lanka, while managing Asiri Hospital , one of the top private healthcare providers in the country.

"The reason for the IPO is we have debts and we are expanding. We see there is so much of potential in Sri Lanka in most of those sectors what we are representing," Pathirage said.

"So obviously we need capitalize on that. We don't want to make this company 10 times bigger in 10 years. We want to make it 10 times bigger in four years."

Analysts said the IPO will be a big success.

"With further mobile penetration and a booming IT sector, Softlogic will have more and more opportunities and its diversified nature will attract investors easily," said Harsha Fernando, the CEO at SC Securities based in Colombo.

AMBITIOUS TARGETS

The diversified holding firm with 30 companies recorded a more-than six-fold net profit growth of 950 million rupees in 2010/11 financial year ended on March 31.

"This year we expect net profit of 1.8 billion rupees. Since the company has a forward price-to-earning ratio of 12 times, we are giving (the IPO) at a discounted rate."

The company expects to expand its retail business four-fold by next year, aiming for 300 stores island-wide.

"So we feel in two years time our retail business alone would give us a topline of $200 million," Pathirage said, adding that he expects the revenue to be around 23 billion rupees this year.

Softlogic also aims to sell over 1 million Nokia handsets in Sri Lankan markets this year compared with 800,000 last year while pursuing an aggressive investment strategy in the island nation's post-war tourism sector.

"We will manage around 400 rooms in two five-star hotels in next three years," he said.

Pathirage owns 50 percent of the company while three other investors have 28 percent. The rest was sold at a private placement in late 2009.

In the IPO, the firm expects to allocate 40 percent of the shares for retail investors, 30 percent to foreign and institutional investors, 20 percent to the company staff of around 5,000 and the rest to unit trust funds. (Editing by Bryson Hull and Muralikumar Anantharaman)

June 9th

http://www.cse.lk/cmt/upload_cse_announcements/7671306218233_.pdf