Home / Front Page / Stax anticipates continued private equity interest in Sri Lanka through 2017

Stax anticipates continued private equity interest in Sri Lanka through 2017


Comments / 1949 Views / Tuesday, 31 January 2017 00:01


Stax, a global strategy consulting firm that advises leading private equity (PE) funds worldwide, noted that investment and merger and acquisition (M&A) activity in Sri Lanka has increased over the past two years. 

An ongoing high level of activity is expected in tUntitled-1he near-term, mainly fuelled by continued interest in the country’s healthcare, hospitality, education, and export sectors. 

Stax noted that M&A trends in Sri Lanka mirror those in Asia—some of the largest PE deals in the region (within the past two years) have been in the B2B and healthcare space. For example, leading PE firms General Atlantic, Bain Capital, and Warburg Pincus acquired a stake in MedPlus Health services, a private healthcare player in India, for a value of $370M in 2015. Overall, M&A activity by PE firms within the Asian region saw an increase of 13% from 2015 to 2016. 

Deal value sizes in Sri Lanka often do not match those within the broader region, as mature APAC economies are such dominant forces. However, there is still scope to attract smart investors to the island if local businesses “think big” and position themselves attractively as high-growth options. 

“Sri Lanka is currently at an economic crossroad and the next few years are crucial. It has experienced stable GDP growth in the past and is expected to move to the upper middle income category by 2020. However, FDI inflows have decreased and the CSE is still not a mature exchange in comparison to heavyweights such as Singapore. A continued focus on hard infrastructure, increased emphasis on soft infrastructure, targeted trade promotion, and a renewed focus on an export-driven economy will be vital for Sri Lanka in attracting more investment capital,” noted Stax Director Dr. Kumudu Gunasekera. 

Private secondary education, universities (foundation, pathway and degree programmes), and technical colleges are ripe for foreign investment, as there is increased spending on education, limited capacities at public universities and schools, and narrow study streams. Investors will also be eyeing earmarked export areas, which include knowledge-based exports (IT/BPO), and manufacturing-based wholesale and branded products.

“Healthcare investment in Sri Lanka generally focuses on developing infrastructure such as hospitals, wellness centres, laboratories, and institutes for medical tourism. However, there is also scope within services oriented to address healthcare needs. By 2030, one in every five Sri Lankans will be over the age of 60, and the 80+ cohort will account for over 5% of the country’s population by 2050. With the combination of rising incomes and ageing populations, we will see increased private healthcare expenditure,” added Dr. Gunasekera. “Aspects of hospitality such as support industries are also at a nascent stage and should be monitored for investment opportunities,” he concluded.

The next three to five years will be a window of opportunity in which local companies in healthcare, hospitality, education, and export industries can attract smart capital. With the right positioning and evidence of high growth, such players stand a good chance of capitalising on the PE interest in Sri Lanka.  


Share This Article


COMMENTS

Today's Columnists

False claims about glyphosate – Debunked

23 August 2017

This is my response to the unscientific blabbering of an article by an archaic old man called Chandre Dharmawardana, published in Daily FT on 10 August.  According to his Wikipedia page, Chandre lives in Canada and is a Canadian citizen. As...


Hedging deal consigned to the dustbin?

23 August 2017

There are unconfirmed reports stating that the AG’s Department has cleared 28 files pertaining to corruption and fraud for taking legal action. According to the information the hedging issue is not among them. It is history now as to how i...


Only citizens, civil society, media and Judiciary can assure ‘Yahapalanaya’!

22 August 2017

The solemn pledge of fostering ‘Yahapalanaya’ – Good Governance – was the key political commitment that led to the regime changes of January and August 2015. Voters defied the pressures before them to rally round and vote f...


The 3-year plan of the Unity Government

22 August 2017

It is reported that the Government will unveil a three-year development program on 4 September to coincide with the second anniversary of the formation of the National Unity Government. The next budget would be formulated in keeping with this prog...


Columnists More