Captains cruise with CSE catch

In what could be described as the biggest deal in recent months, slightly over 10% stake of HNB changed hands yesterday for Rs. 8 billion with multiple players involved. Intense trading of a total of 20.3 million HNB shares (10.6%) between a high of Rs. 445 and a low of  Rs. 400 before closing at Rs. 415.50, up Rs. 4.70 shook the Colombo stock market’s opening yesterday. The deals which generated Rs. 8.1 billion turnover included 22 crossings of 19.5 million HNB shares at Rs 400.

Buyers included top business leader Sohli Captain collecting 10.5 million shares or 5.5% stake for Rs. 4.2 billion, UK based Jupiter Fund, Europe’s second largest, picking up 1%, EPF and Bank of Ceylon buying a further 1% and 0.5% each. There had been several high networth individual investors including Softlogic Holdings-fame Ashok Pathirage who had picked up around 0.5% stake or 1 million shares. Sellers included CDB Exports, which used to be accounted along with overall Stassen stake in HNB. Due to the dispute between original partners of Stassen the block wasn’t up for sale but it is claimed the divestiture follows a breakthrough for some of the co-founders. CBD’s directors include Stassen-fame Raj Obeysekera and Zaki Ali among others but not tycoon Harry Jayawardena.

As at 30 June, CBD held 15.3 million shares of 6.49% stake in HNB. Speculation was that the entire holding of CBD (amounting to 7.5% as of yesterday) was sold as part of Central Bank directive for the streamlining of HNB shareholding. With CBD’s exit, Harry J’s diminishing control in HNB is held by Stassen Exports (5.6%) and Distilleries (2.5%).

Another seller was Brown’s which was cashing-in. Brown was holding around 10% (5.76% stake or around 13.6 million shares as at 30 June), and had sold around 5.7 million shares yesterday for Rs. 2.2 billion. It too had made a hefty capital gain whilst retaining 7% stake. Perhaps linked to this, Brown’s stock price rose by Rs. 24.60 to close at Rs. 272.30 (peaked to a high of Rs. 293.40) with 1.27 million shares traded.

EPF continues to be bullish and aggressive on listed equities. Prior to yesterday EPF was holding 5.7% stake in HNB as of 30 June 30 and analysts believe EPF’s effective holding could be around 9%. Last week EPF also bought 5 million shares of JKH for Rs. 1.6 billion. As at 30 June 30, EPF held 22.3 million or 3.6% stake in Sri Lanka’s premier blue chip and was the third largest shareholder.

Apart from entering HNB, Captains between Friday and yesterday had also picked up around 5% stake in Colombo Dockyard at an estimated cost of Rs. 1 billion.

Yesterday a total of 3.86 million shares of Dockyard traded for Rs. 1 billion between a high of Rs. 315 and a low of Rs. 275 before closing at Rs. 288.20, up Rs. 7. Deals included three crossings of 2,581,900 shares at Rs. 270 and five crossings for 779,118 shares at Rs. 275. Bulk of the shares had been picked up by Captains. On Friday 6% stake or 4.26 million of Dockyard traded at Rs. 270 each with bulk of the buying by Sri Lanka Insurance Corporation. Seller was Horizon Energy LLC of UAE which has sold out by yesterday after having 10.65% stake or 7.3 million shares as at 30 June.

Analysts said Captains were diversifying their investment portfolio which has been hitherto confined to JKH (estimated to be over 100 million shares or over 15% stake) and CIC (over 53%). Last week Captains enjoyed a tidy capital gain when they sold 5 million shares of JKH at Rs. 329 each to EPF.

Thanks to the deals on HNB and Dockyard, the stock market turnover zoomed to Rs. 12.5 billion, highest in 30 months.

Earlier in the day indices gained sharply but the Bourse closed negative due to profit taking.

Banks Finance & Insurance and Construction & Engineering sectors were the highest contributors to the market turnover while Banking sector index increased by 4.19% & Construction sector index declined by 0.1%.

The market also saw 5 major crossings including two crossings for 617,000 shares of Richard Pieris & at Rs. 172 (whilst a total of 2.1 million shares traded for Rs. 387.6 million), two crossings for 160,000 shares of John Keells at Rs. 350 (a total of 560,000 shares traded for Rs. 196 million whilst JKH closed down

Rs. 5.50 to Rs. 349.60) and 193,600 shares of Seylan Bank at Rs. 115.

Moreover, hotel sector counters gathered momentum on the back of retail interest whilst Nawaloka Hospitals, Ceylon Grain Elevators and Bairaha Farms remained among retailers’ favourite picks.