Amidst crisis in bourse, PLC IPO shines with record Rs. 9.5 b demand

Amidst the crisis of confidence in the Colombo stock market, People’s Leasing Company Ltd.’s (PLC) Initial Public Offering (IPO) of Rs. 7 billion had drawn applications worth Rs. 9.5 billion, prompting analysts to emphasise that there is a big appetite for good value stocks among investors.

The IPO, biggest by a home-grown entity, drew 10,485 applications, the bulk of which had come via payment by bank draft and cheques.

Registrars to the issue SSP Corporate Services said there were 10,459 applications in that category requesting 258.76 million shares worth Rs. 4.657 billion whilst applications via payment made by bank guarantee amounted to 26, requesting 270.5 million shares worth Rs. 4.869 billion.

Total demand for the IPO involving 390 million shares at Rs. 18 each was for 529.3 million shares worth Rs. 9.527 billion.

“The oversubscription of the IPO is a vote of confidence in the track record of People’s Leasing, which is the market leader and one of the fastest growing leasing companies in the country.

 The overwhelming response reflects the trust placed by investors in the company,” PLC’s Chief Executive Officer D.P. Kumarage said.

PLC is the market leader in the leasing industry in Sri Lanka.

The IPO, which officially opened on 3 November, was closed within a few hours on the same day upon being oversubscribed.

The demand for the issue emanated primarily from institutional investors, both foreign and local, and customers of the PLC who are expected to have a medium- to long-term investment horizon.

The significant investor interest drawn for the IPO amidst negative market conditions both locally and regionally bears witness to the trust placed in the financial position and performance of the company.

The new shares will amount to 25% of the issued and paid up ordinary shares of the company subsequent to the issue.

The primary objective of the issue was to obtain a listing for the ordinary voting shares of PLC on CSE to comply with a special directive issued by the Monetary Board of CBSL. The company was required to obtain a listing on the CSE during the calendar year 2011. The IPO was jointly managed by NDB Investment Bank Limited and Capital Alliance Holdings Limited.

Commenting further on PLC’s future plans, Kumarage mentioned that whilst the capital raised through the IPO would be utilised for the purpose of lending, it would also strengthen the company’s capacity to fund its ambitious growth plans.

The company noted that basis of allotment of shares to the applicants would be notified to the Colombo Stock Exchange shortly.

PLC is a specialised leasing company in Sri Lanka, incorporated in 1995 as a fully-owned subsidiary of People’s Bank (PB), the second largest State-owned bank in Sri Lanka, with the objective of providing leasing and related services to the customers of PB.

Since then, PLC has emerged as the market leader in the provision of leasing and hire purchase facilities with the strength and backing of PB, its wide network of branches and the expertise of PLC’s visionary and dynamic management team.

PLC is now positioned as a provider of a broad range of financial services with subsidiaries carrying out micro finance, Islamic finance, property and casualty insurance and fleet management operations under its wing. The company provides its financial services through a wide network comprising 37 regional branches and over 120 window offices located within PB branches.