Employees fund sells 11% stake of Ceylinco Insurance for Rs. 3.5 b

• India’s Shriram City Union Finance buys 6.3% for Rs. 2 b, existing shareholder Pictet picks up 2% and balance by a local corporate and individual

An employee fund and the largest shareholder of Ceylinco Insurance divested 11% stake in the company for Rs. 3.5 billion yesterday, boosting the market’s turnover to top Rs. 5 billion, the highest in eight months.

Ceylinco Insurance Employee Share Ownership Trust of Ceylinco Insurance (CIESOT) Ltd., which owns a 23% stake, sold down 11% amounting to 2.2 million shares at Rs. 1,602 each through six crossings. The counter closed at Rs. 1, 600, up by 3.37% or Rs. 52.10.

Chennai-based and listed Shriram City Union Finance, a non-banking financial company, bought 6.3% for Rs. 2 billion whilst an existing shareholder with a 10.68% stake Banque Pictet & Cie S.A picked up a further 2% shareholding.

The balance had been bought by a local institutional and an individual investor.

The part divestiture by CIESOT is following a Supreme Court ruling to Ceylinco Insurance that CISOT must reduce holding in the company to 5%. 

Yesterday’s turnover was the highest at the CSE since 11 September 2014 and nearly five-times more than this year’s daily average of around Rs. 1.11 billion.

Buying into Ceylinco as well as few other stocks saw a foreign inflow of Rs. 2.73 billion, the highest since 9 May last year, extending net inflows so far this year to Rs. 5.65 billion.

Apart from strategic deals, the Colombo Bourse closed negative.

Reuters said investors had been optimistic about earnings in a lower interest-rate regime, but political uncertainty ahead of a parliament election has weighed on sentiment.

The Bourse has gained about 4.9% since the Central Bank cut key rates on 15 April, while yields on t-bills have fallen 46-61 basis points since then.

As of Wednesday, earnings of 37 listed companies have on average shown a rise of 19.5% year-on-year in the first quarter, said a stockbroker.

Investors are waiting for direction on the political front, analysts said, adding that the market could be dull in the medium term until the perception of political uncertainty was addressed.

Sri Lanka’s Parliament is expected to debate and pass some key reforms next week and President Maithripala Sirisena has promised to dissolve Parliament after that.