George Steuart Finance share price dips despite new deal

Wednesday, 23 July 2014 00:37 - - {{hitsCtrl.values.hits}}

The share price of George Steuart Finance (GSF) dipped by Rs. 6.80 or nearly 15% despite a likely boost to it following the proposed takeover by Deshodaya Development Finance Ltd. for Rs. 500 million. GSF saw 246,035 of its shares changing hands via 740 trades yesterday between a low of Rs. 38.20 and a high of Rs. 44, before closing at Rs. 39.10. The counter was the second biggest loser percentage wise yesterday. On Monday a higher volume of 374,445 shares traded but was down by only Rs. 1.80. The continuous dip in price came despite GSF announcing on Monday that the Company has signed a MOU with social entrepreneur A.T. Ariyaratne’s Sarvodaya-linked DDFC to sell majority stake of 75% held by George Steuart and Company Ltd. (51%) and Capital Trust Holding Ltd. (25%). The valuation for the entirety of the company was Rs. 500 million. With the number of shares in issue of GSF being 22.5 million, the deal amounts to a price of Rs. 22.22 per share. Net asset per share of GSF as at 31 March 2014 was Rs. 14.61. In April the original owner Divasa Equity sold a 51% stake in GS Finance to related party George Steuart and Co Ltd. at Rs. 28.80 per share. GSF is among the first few finance companies to announce amalgamation or acquisition under the Government initiated financial sector consolidation with the Central Bank being a facilitator. The deal between GSF and DDFC however is subject to regulatory approval. As at 31 March 2014, George Steuart Finance had Rs. 329 million in shareholders’ funds including Rs. 90.6 million in retained earnings and Rs. 225 million in stated capital. Customer deposits amounted to Rs. 1.06 billion, up from Rs. 699.6 million a year earlier. Total liabilities were Rs. 1.17 billion, up from Rs. 808.5 million. Assets were worth Rs. 1.5 billion, as against Rs. 1.1 billion on 31 March 2013.

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