Control at Ceylinco Insurance thrown open?

Wednesday, 23 March 2011 01:33 -     - {{hitsCtrl.values.hits}}

  • Subasinghe family and related parties up stake to 26% as share price hits all time high on 11% stake deal; Foreign fund and high networth individuals among sellers

Control of the country’s biggest life and second largest general insurer Ceylinco appears to be at large with its major outside shareholder yesterday increasing their collective stake to 26%.

Deals on 11.7% voting stake or 2.38 million shares of Ceylinco Insurance via 176 trades generated the highest turnover of Rs. 1.77 billion with the stock price peaking to Rs. 740 before closing at Rs. 727.40, up by Rs. 82.60 or 13%. Yesterday’s closing is an all time high beating the previous best of Rs. 680.

Of the trades, 2.19 million shares (around 10.7% voting stake) were done via 11 crossings at Rs. 750 each.

The seller was a foreign fund Emerging Market Umbrella Funds which as at 31 December, 2010 held 1.49 million shares or 7.45%.

The buyer was exporter Prabhash Subasinghe and related parties.

In February a consortium involving Subasinghe and connected companies Global Sea Foods Ltd. and Global Rubber Industries Ltd., acquired 11.52% voting stake in Ceylinco thereby becoming the single largest shareholding group from outside.

 By end 2010 they held a collective stake of around 4% which was increased to near 12% by early February with a price of around Rs. 500 per share paid, higher by 17.5% or Rs. 74.30 from its previous close. 

In between February’s bigger purchase and yesterday’s their collective stake had been increased to 15%.

The concerned parties didn’t figure in the top 20 voting shareholders of Ceylinco as at September 2010.

Now in distress but former business tycoon Lalith Kotelawala founded private firm Ciesot Ltd. owns 23.54% in Ceylinco Insurance thereby remaining as the single largest shareholder. As at December 2010 the second largest shareholder was Pictet and Cie which owns 10.68%. Ceylinco Insurance Employee Gratuity Trust Fund owns 8.66% voting stake whilst the Company’s Pension Fund owns a further 3.69% voting stake and an entity called Ceylinco Life Holdings Ltd. holds around 2.63%.

High networth Ken Balendra family who were listed among top 20 voting shareholders were believed to have sold their collective minor holdings of around 600,000 shares yesterday.

Analysts said with future of Kotelawala promoted entities is unknown the management’s clout via employee funds is less than 15% which puts Subasinghe and connected parties in effective control at Ceylinco Insurance. None of them are on the Board, which has seen several new appointments since last year expanding the number to 16.

Ceylinco’s nonvoting stock saw its price gain by Rs. 41.30 to Rs. 341.30 after peaking to a high of Rs. 350 though on thin volume.