Adam Investments confident of biz turnaround, more acquisitions on the cards
Wednesday, 7 May 2014 00:55
Company looks to grow on benefits from listing via Rs. 400 m IPO
Adam Investment Ltd. is in the market to raise Rs. 400 million to expand some of its high potential businesses and its Chairman was emphatic that the company was keen on growing via benefits from listing on the Colombo Stock Exchange.
With diversified interest via strategic investments and fully owned subsidiaries, Adam Investments Ltd., (AIL) is issuing 133.3 million shares at Rs. 3 each.
An investment holding venture, AIL has growing interests in apparel exports, IT/telecom/electronics, import trading, commodities, FMCG, construction, automotive and strategic equity investments.
It will use funds raised via the IPO to expand the IT sector/Electronics (Rs. 200 million), apparel (Rs. 100 million) and metal/construction (Rs. 50 million).
“We are interested in broad basing our shareholding, improving governance structure, enhance customer trust as well as access funds thereby benefit from being a stable listed company,” Adam Investments Ltd. Chairman Dr. Ali Asger Shabbir Gulamhussein told journalists yesterday.
Incorporated in 2011, AIL holds 39.8% in listed Orient Garments PLC, 10% in PC House Holdings PLC and 9% in Ceylon Foreign Trades PLC, in addition to 43% in Network Communications Ltd., 47% in Adam Metals Ltd. and 31% in Adam Apparels Ltd. In addition it has two 100% owned subsidiaries Adam Automobile Ltd., and Adam Air Conditions Ltd. Some of the companies such as Adam Metals and Adam Apparels have been in operation since the 1970s whilst NETCOM has been in operation since 2002 dealing with ICT products in addition to holding the license to operate external gateway for international communication and international simple voice resale.
AIL said existing investments and these companies coming under an investment holding company will strengthen all, allowing each company to strive in their respective sectors utilising synergies, reducing overheads and streamlining management practices and creating overall a sustainable environment for growth and excellence.
Gulamhussein cited a recent success of turning around Orient Garments PLC, which reported a profit of Rs. 113 million in the fourth quarter of FY14 up 864% from Rs. 13 million a year earlier following AIL gaining board control of the company in January 2014.
“We stopped and reversed a trend of losses over the last few quarters of 2013/14 and have now set the company on a steady course towards greater efficiency and effectiveness which are reflected in the bottom line,” said the AIL Chairman. The added advantage of its own exposure to apparel has helped AIL as well as the listed apparel subsidiary.
Since the acquisition, AIL has expanded its in-house designed apparel exports share to 20% and hopes to increase it to 40%. It has scaled up operations with the number of production lines increased from 29 to 57. Diversifying into non-traditional apparel buying markets is another focus.
AIL is also encouraged by the fact that investors have recognised the positive impact as Orient Garments’ share price has risen to Rs. 15, nearly 100% more than AIL paid for its 39.8% stake.
“We are a newly formed investment company which looks at investment, revival and management of a growing number of subsidiary companies as its core business. We look for value in our investments. We buy companies when their valuations are realistic and then by implementing sound internal procedures, systems, good governance and processes we gain higher efficiencies. These in turn translate in to greater profits by improving the spread between cost and revenue,” the AIL Chairman said.
“This is a disciplined and robust system which is inherent in our well seasoned director board. We endeavour to make all our investments this way and I am certain the market will be seeing more of this in the near future,” he added.
Commenting on market sentiments, managers and financial advisors to the issue Capital Trust Financial Ltd. Managing Director G. Ramanan (who is also incidentally a Non-Executive Independent Director of AIL) said the demand for fundamentally sound IPOs are good and there was an upswing in sentiments overall. He said AIL is attractive on forward price earnings ratio among other factors.