Mega funds discover Lanka

The critical promotion of investing in Sri Lanka got a big boost last week with around 10 top international institutional funds finding the post-war growth story was real, following a joint initiative between global giant Credit Suisse and premier blue chip John Keells Holdings (JKH).

The duo organised a fact-finding team of 10 institutional investors (nine of whom are new to Sri Lanka) from Asia.

In a first-of-its-kind initiative, the visiting team met CEOs and senior management of top companies at their offices as well as presentations by ministers and senior officials from the Government, Central Bank and Securities and Exchange Commission.

“Collectively, those investors represent US$ 1.8 trillion of global assets under management. This reflects a strong level of global interest in Sri Lanka,” Credit Suisse Managing Director and Chief Operating Officer for Asia Pacific Dumith Fernando told Daily FT.

“I was told that the visit far exceeded their expectations in terms of finding out the post-war profile of Sri Lanka, planned development and the overall potential for investments,” the Lankan-born Fernando, who also has an MBA from the Harvard Business School, said.

The investors met John Keells Holdings, Commercial Bank of Ceylon, Aitken Spence Holdings, Dialog Axiata, Hatton National Bank, Distilleries Company of Sri Lanka, Royal Ceramics Lanka, Colombo Dockyard, Softlogic Holdings and Expo Lanka Holdings.

With regard to the latter two, their CEOs – Ashok Pathirage of Softlogic and Haniff Yusuf of Expo Lanka – shared their success stories over an informal dinner. Both companies are planning to list on the CSE.

Economic policy and public finance-related officials with whom the investors met included Senior Minister for International Monetary Cooperation Dr. Sarath Amunugama, Treasury Secretary Dr. P.B. Jayasundera, Central Bank Governor Nivard Cabraal and SEC Director General Malik Cader.

“The visiting team was impressed with the consistency of the message from a policy stand point from the senior officials and their confidence level,” Fernando added.

This hands-on promotion of Sri Lanka by Credit Suisse was not the first but a follow-up to an initiative it spearheaded last year. For its annual mega investor conference in Hong Kong in 2010, it invited JKH and Dialog to present the investment case for post-conflict Sri Lanka.

For the 2011 event slated for later this month, Credit Suisse has invited a panel of Sri Lankan banking CEOs including Commercial Bank, HNB and Sampath Bank. The annual event draws over 2,000 institutional and high net worth investors.

Fernando said that Credit Suisse had an active business dialogue with a number of the most prominent companies in Sri Lanka.

The company has also formally tied up with John Keells Stock Brokers, a partnership which has seen the Lankan broker’s foreign business doubling, according to John Keells Capital President Krishan Balendra.

The tie-up with Credit Suisse is also the first with a top tier investment bank by a Lankan broking house.

He also confirmed that the visit was a major boost for Sri Lanka and expressed confidence that business would flow in tandem with the improving country profile.

Credit Suisse’s proprietary HOLT valuation system offers investors a universe of 14 Sri Lankan stocks with an aggregate market capitalisation of over US$ 8.8 b.

Fernando said that the fundamentally-strong growth profile of post-war Sri Lanka had a strong correlation for equity market. He said that the higher level of liquidity would encourage more foreign portfolio investment into Sri Lanka, along with a strong regulatory environment and good minority shareholder rights.

It was pointed out that the diversity of listed securities as well as exchange traded funds would make the Colombo case attractive, while widening the ability to hedge against any risks. 

Credit Suisse was the number one foreign broker by exchange market share in eight Asia Pacific markets in 2010. It has research coverage of 15 Asian markets and sales and trading capabilities in 16 regional markets. Recent expansion in Asia included gaining a banking license in India and establishing an onshore brokerage operation in the Philippines.

Credit Suisse was recognised as the Best Global Bank in 2010 by Euromoney magazine, a leading industry publication. It was also awarded ‘Best Emerging Markets Investment Bank’. Euromoney has also named Credit Suisse ‘Best Private Bank Globally’ in its 2011 awards, which were just announced.

Balendra said that with several Lankan companies exploring new avenues of raising foreign capital, the tie up with Credit Suisse would enable competitive placement of corporate debt issues as well.

As an integrated bank, Credit Suisse offers clients its combined expertise in the areas of private banking, investment banking and asset management. It provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland.

Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 50,500 people.

Its Investment Bank operates in 57 locations across 30 countries and Credit Suisse is active across the full spectrum of financial services products, including debt and equity underwriting, sales and trading, mergers and acquisitions, investment research, and correspondent and prime brokerage services.

Apart from having investment interest, Credit Suisse has been an active supporter of philanthropic causes in Sri Lanka. Its partnership with Room to Read began in the aftermath of the 2004 tsunami, when the charity began operations in Sri Lanka. Since then, Credit Suisse has grown into Room to Read’s largest corporate sponsor and supports the organisation through grants, its Global Education Initiative and in-kind donations.

With Credit Suisse’s support, Room to Read has established 175 bilingual libraries across Asia and Africa, built 47 schools in Asia, supported the education of 1,000 girls, sourced and published five new local language children’s books and helped fund strategic growth of Room to Read’s operations in Sri Lanka and other countries. Credit Suisse has donated office space to Room to Read in Hong Kong, Tokyo and London.

Through all of the partnership initiatives, Credit Suisse and Room to Read have impacted over 70,000 children.

In June 2008, Credit Suisse announced the opening of the Credit Suisse Learning and Development Centre in the Tissamaharama District. Working in partnership with the Schools Relief Initiative (SRI), Credit Suisse donated US$ 54,000 towards the construction and equipment of the centre, which will support the full-time education for special needs children, including those with hearing difficulties, autism and Down’s syndrome.

After the 2004 tsunami, Credit Suisse provided support for the World Food Program’s Food for Education programme. This provided kitchen, secure food storage and serving facilities for 19,000 children.