Hatton Plantations sharpens competitive edge through strategic partnership with Regency Teas

Signing and exchanging the strategic partnership agreement between Lotus and Regency Teas (from left): HPL Chief Financial Officer Annemarie Outschoorn Garnier, Managing Director Menaka Athukorale, Director Indrajith Fernando, Regency Teas Chairman Damascene Perera and Director Shane Perera

• Buys 12.3% stake for Rs. 290 million
• A positive response by domestic entrepreneurs with a robust investment pipeline

Hatton Plantations (HPL) has entered into a strategic partnership with Regency Teas, a milestone in the company’s rapid and remarkable progress.

Last week Regency Teas made a strategic investment of Rs. 290 million by acquiring close to 30 million HPL shares from Lotus Renewables (LRE), representing 12.28% stake.

Lotus Renewables is an energy sector leader in the country, with a diverse company portfolio including HPL. One Sri Lanka’s largest tea producers, HPL generates close to 10 million kilograms of tea, with 14 estates and 11 factories. Its plantations span is in excess of 7,200 hectares of land, and its premium quality high grown teas are grown in estate elevations reaching 4,800 ft above sea level. 

Upon completion of the transfer, Lotus would continue to hold the majority shareholding of 75.65%. The proceeds of the share sale will be used by Lotus primarily to expand its renewables and agricultural portfolio. HPL is expected to benefit from Regency Teas’ management expertise and vision, especially with its standing as a leading exporter of value-added tea from Sri Lanka to over 25 countries worldwide. With a tea-bagging capacity of three million tea bags per day, its production plant is certified with all modern quality certificates including ISO 22000 and FSSC 22000. Regency’s products are also certified with Halal, Kosher and Organic labels.

HPL and LRE Chairman Gary Seaton said: “The combination of these two great companies — Regency and Lotus — within the folds of the HPL business ecosystem enables to scale, portfolio, selling and distribution capabilities to leverage competition in the race for excellence in the Sri Lankan tea industry. With a large portfolio of brands and being a leading tea export business, Regency has the ability to satisfy any tea connoisseur’s need. I am honoured to be one of the leaders of this great expanded team — and excited that together we will challenge this industry in a new way.”

G&G Singapore, Lotus and HPL Director K. Gowri Shankar said: “Lotus’s acquisition of Hatton Plantations was one more in a series of potential major investments in Sri Lanka. It was a growth opportunity for Lotus, and was designed to extend operational capability, combining both Lotus’ and HPL’s strengths. G&G Singapore, the parent company of Lotus, has cast its net wide, with interests in strategically investing in varied sectors including renewable energy and sustainable agriculture. Lotus is continually on the lookout for more opportunities in Sri Lanka, to expand its renewables, agri-commodity trade and plantations.” 

HPL Director and Chairman of the governance committees Indrajith Fernando said: “This transaction is a positive response by domestic entrepreneurs, now with a robust investment pipeline, in a low interest rate regime and with a stable exchange rate. Lower reliance on foreign financing and the timely repayment of the country’s debt obligations, along with the reduced cost on domestic debt have also resulted in a favourable shift for example in the Colombo Stock Exchange.”

This is despite rating agencies and doomsayers exaggerating the obvious and wishing for a downfall, he said.

Lotus Renewable Energy Group acquired HPL in a Rs. 1.7 billion stock market deal, via a crossing on the Colombo Stock Exchange in 2019. Hatton Plantations — CSE listed — is a group company of Lotus, and Lotus is the Sri Lankan subsidiary of G&G Singapore.