CL Synergy docks at CSE to launch IPO on 7 April

Friday, 25 March 2022 00:20 - - {{hitsCtrl.values.hits}}

CL Synergy Board of Directors

By Darshana Abayasingha

Leading freight forwarding firm, CL Synergy, announced its listing on the Colombo Stock Exchange (CSE) and will open its Initial Public Offering (IPO) on 7 April with an issue of 63 million new ordinary shares, and sale of 28.5 million existing ordinary voting shares at Rs. 14.00.

The issue will divest a 36% stake and raise Rs. 1.28 billion in funds, with a forecast price to earnings ratio of 4.6x for the coming financial year.

“We have stumbled upon a hidden gem in terms of the value proposition, in a lucrative and sought-after sector. It is priced attractively, and it has an intrinsic value of Rs.21.59 per share, so it effectively comes at a 50% discount.

“So, there is a huge upside there, plus, 66% of the income is in dollar terms, and we haven’t even factored the upside that comes from the recent devaluation,” Mr. Ray Abeywardena, Managing Director of Acuity Partners who acts as the Financial Advisor and Manager to the IPO stated.

Supporting CL Synergy’s strong financial footing, 70% of the revenue comes from the Company’s export clientele primarily serving the apparel and agriculture sectors, with revenues of Rs. 6.1 billion annually and gross profits of Rs. 850 million.

The company intends to allocate Rs. 320 million to enhance working capital within CL Synergy, and Rs. 212 million to reduce long-term debt. Rs. 200 million will be invested on expanding regional presence in buyer and sourcing markets, and a further Rs. 150 million towards strengthening core digital systems.

“We are in a service-driven industry, and we are in this position because of our hands-on approach. We have had organic growth and reinvested profits and gone into different areas. There is no official ranking system in the Sri Lankan market but based on volume and liner statistics it›s not an exaggeration to say we are amongst the top five logistics companies in Sri Lanka.

“As a local champion, we are at a new phase. We are going to countries like India, China, Bangladesh and buyer markets like the US and the UK, we need resources. We will utilise the funds for regional development, and we are confident this would bring significant new revenues to the company as well the country,” said CL Synergy Managing Director Roshan Silva.

The company is also looking to strengthen its digital platform to enhance its local operations and expansion into the different regions to compliment the multitude of prestigious local and international clients it serves.

“With over 17 years in the freight forwarding industry, we have evolved into a holistic, end-to-end freight forwarding solutions provider with a strong presence in the local and international markets, and have no intentions of slowing down,” Silva added.

The company expects to be listed on the Main Board of CSE and would be a company representing the lucrative and vibrant Logistics sector in CSE, which is also declared an essential service sector by many governments globally following the new developments.