PMB - Buy Recommendation from NDB Investment Bank

slequityanalyst wrote:Hi Sstar, isn't it a "do not buy" recommendation as per what is produced up here from the Independent Advisor's Report. They recommend not to accept the offer from Offerors. 

When you refered to "NDBIB contraversy" I think you are questioning the indepedence of NDBIB to function as the independent advisors. This has to be looked at in light of other dealings NDBIB has with Offeror/its closely connected parties. I think your skepticism is perfectly fine going by the facts available which I would like to highlight below:

Firstly, the Offerors (PLC.N0000 and People's Bank) have had significant business dealings with NDBIB in the recent past which relationship I assume they would not want to damage by issuing an opinion in contravention to their expectations. For instance, all the PLC debenture issuances as well as their CSE lisitings (including the equity IPO) were handled by NDBIB generating fee based reveneue for NDBIB. (I'm sure they would want to continue that lucrative business in to the foreseeable future and for that they will have to act in the best interest of them rather than acting independently on behalf of the other shareholders! That is a reasonable argument and the board would have avoided even the little bit of this by appointing a totally independent party out of other players). 

Secondly, I'm sure that NDB group has lot of other involvements with People's Bank and PLC. For instance, NDB Wealth Management must be a regular investor in these debentures that NDBIB structure for PLC. Even though this may be of little importance to lack of independence, this I believe will give rise some sort of biasness towards NDB group's investee company, i.e., PLC.

I think the SEC should look in to these things rather than trying to comment on valuations.

Ceylon Finance Today: Sri Lanka's boutique investment bank Frontier Capital Ltd is eyeing a controlling stake in People's Merchant Finance PLC due to its attraction in a land holding coupled with the investment potential.

By Ravi Ladduwahetty
Ceylon Finance Today: Sri Lanka's boutique investment bank Frontier Capital Ltd is eyeing a controlling stake in People's Merchant Finance PLC due to its attraction in a land holding coupled with the investment potential.

"We already have purchased a 2% equity stake in People's Merchant Bank and we are hoping to increase stake further so that we will get the control of the company, Frontier Capital CEO Nishan Sumanadheera told Ceylon FT late Friday night.
The current shareholding of People's Merchant Finance PLC is People's Bank - 26.13 %, People's Leasing -13.07%, Capital Trust Holdings PLC ( 9.41% + 6.15% + 4.65%) Deut she Bank- 9.9%, CEO Ramanan Govindasamy- 9.61 % and Lakshman Fonseka -9.70%
This is indeed a very valuable asset and the reason why we are wanting to get the controlling stake is due to the 108 perches of land which the company has at Nawam Mawatha with around Rs 1.5B which has not been made use of and which could be developed into a prime property project, Sumanadheera said.
He also expressed confidence of purchasing the Capital Trust Holdings PLC stake in People's Merchant Finance PLC.
Meanwhile, Capital Trust Holdings PLC Managing Director Thushan Wickremesinghe, when contacted, said that he will divest the Capital Trust stake, but only if was at the right price. He also said that there was immense public confidence in the company due to People's Bank and People's Leasing having shares which was reflected in the company attracting deposits.
Sumanadheera also added that he has a Hong Kong based partner who will buy the controlling interest of the company and a Singaporean based property developer who will add value to the Nawam Mawatha property which will realize its full value.
"This is a property whose value could be increased to over Rs 5 Billion and we are confident of reaping at least 10% return per annum on the investment," Sumanadheera said.
He also asserted that the company had a huge goodwill and the brand name from People's Bank and People's Leasing which should be of advantageous as well and that the real challenge was to turn the company into a profit making venture and a super rich stock in the market.

gayanath wrote:Me forum eke yana ewa balala trade karannepooooo

slequityanalyst wrote:My argument is that NDB Investment Bank will not give an opinion worrying about us the retail investors as they value their relationship with the People's Bank group (If not they should be a charity!!) So, my belief is that their opinion reflect what the offerors want them to say (rather not a favorable one for minority).