JAT says Rs. 2.23 b IPO to bolster expansion here and overseas

By Darshana Abayasingha

JAT Holdings Chairman Dr. Sivakumar Selliah

JAT Holdings Founder-Managing Director Aelian Gunawardene

JAT Holdings CEO Nishal Ferdinando

JAT Holdings, Sri Lanka’s premier finishing, living and furnishing business, yesterday formally announced its Rs. 2.23 billion Initial Public Offering (IPO) scheduled for 20 July issuing 82.9 million voting shares at Rs. 27 each.

Cash positive JAT Holdings will utilise the capital to strengthen its expansion into South Asia and Africa, whilst the company has already established itself in Bangladesh as market leader in wood coatings and finishing products, transforming user experience in that market. 

From funds raised via the IPO, around Rs. 500 million will be used to set up manufacturing facilities in Bangladesh, Rs. 300 million for similar facilities in Africa, a further Rs. 300 million will be deployed to develop a state-of-the-art research facility in Sri Lanka, whilst the remainder would be utilised to enhance the company’s White 

by JAT portfolio. 

The IPO is managed by NDB Bank, who remarked the valuation points to immediate capital gains of 20%, with a price earnings ratio of ten times as per its projections for 2022. They anticipate investors to receive long-term returns of 30%, adding that paints companies globally have always delivered significantly health premiums compared to most other construction business. 

Addressing a briefing on the JAT IPO yesterday, its Chairman, Dr. Sivakumar Selliah, underscored the company’s commitment to corporate governance, noting that despite JAT hitherto being a non-listed company, it had published Annual Reports for the past few years, which have bagged a number of awards. He remarked that all statutory committees have been in operation within the company for a period of time, including an investment committee, headed by independent directors. 

A question was raised if ongoing restrictions on outward foreign exchange remittances and its possible extension could hamper JAT’s foreign expansion plans. The company responded that overseas expansion is conducted under JAT Exports DMCC, which is incorporated overseas and is cash rich, plus, billed to deliver further significant returns from operations this year.

Accordingly, JAT Holdings is well prepared to fund its overseas investments for a period of time via JAT Exports DMCC, and poses no obstacles in the event the restrictions in Sri Lanka are extended the company said. JAT is considering listing its operations in Bangladesh on the Stock Exchange there based on performance there in four to five years’ time it was revealed. 

Speaking during the briefing, JAT Holdings Founder and Managing Director Aelian Gunawardene said his company – which commences business in 1993 – had delivered a turnover of Rs. 1 billion by 2011, and then Rs. 9 billion by 2021, demonstrating its strength and dominant position in the market. 

He remarked this was partly due to the commitment and investment it made in training over 30,000 painters in Sri Lanka from almost every furniture company from the outset, and a further 20,000 in Bangladesh, and thus enjoy a wide customer base who believe in their products and quality. 

The transition to low-voc environmentally friendly products had later opened up domestic markets in addition to industrial customers, and touched on the complete transformation the company has spearheaded in Bangladesh. 

“We are a cash positive company, and we have already set forth in motion the plans we have set out. We want to further unlock the potential of the company and enable our citizens and stakeholders to be part of this journey through this IPO,” Gunawardene said. 

Responding to further questions, the company said despite the slowdown from the pandemic and impact on tourism business, demand from household sector has delivered over Rs. 3 billion in turnover to JAT, and the company expects pent up demand to drive further growth as tourism reopens towards end of the year.