Six Senses’ Regional HQ to list on CSE

In what is likely to be one of the biggest boosts to Sri Lanka’s investment profile globally, the world-renowned leisure brand Six Senses is to list its regional business unit on the Colombo Stock Exchange (CSE).

Six Senses, of top Thai hotelier of Indian origin Sonu Shivdasani, has two resorts in the Maldives whilst the first in Sri Lanka is under way in partnership with the Aitken Spence Group. The third resort in the Maldives is slated to open soon whilst the Six Senses brand is also being rolled out in India in addition to scouting for prospects in Nepal. (See story on page 9)

In a deal involving reverse acquisition, Six Senses is to make Sri Lanka its headquarters, owning and overseeing its leisure assets in the South Asia region.

Daily FT learns that the process for the listing of this entity is already underway.

According to market sources, a valuation of the business and the entity is pending but around 30% stake of the venture is expected to be offered via the IPO. Some estimate the value of the IPO to be between US$ 30 and $ 40 million.

Analysts pointed out that the Colombo stock market remains attractive for issuers whilst the post-war boom in tourism and double digit growth forecast along with Sri Lanka positioning itself as a regional hub were other magnets for Six Senses.

When listed it will be the first of its kind on the Colombo bourse and analysts noted that success would provide an excellent window of opportunity for Sri Lanka to lure more international or regional companies to consider listing apart from setting up headquarters in Colombo.

Sonu, during a trip to Sri Lanka late last year, was quoted by local media as saying: “Over time tourism will become a dominant part of the economy in Sri Lanka, so it makes sense for us to operate in a country like that.”

“Since the return of peace I see Sri Lanka becoming an important regional hub,” he had told Lanka Business Online.

Six Senses is a resort and spa management and development company with properties in six countries including the Maldives, Thailand, Vietnam, Oman, Jordan and Spain.

Its properties in the Maldives are branded as Soneva by Six Senses with the two properties being Soneva Fushi, Maldives and Soneva Gili, Maldives, whilst the third one, Six Senses Laamu, will be opening next month. Six Senses Laamu is the only resort on the virtually uncharted Laamu Atoll, 150km from the equator.The other brand is Evason.

The Group has has seven resorts in Thailand, three in Vietnam, one each in Oman and Jordan, with another opening soon in Spain.

Sonu is also making his debut in India with spas, resorts and fine dining restaurants along with boutique hotels to tap high end travellers, according to Indian media reports.

The first Six Senses Spa across 7,000 sq mt will start functioning next month at the Jaypee Greens Golf and Spa Resort at Noida on the outskirts of Delhi. The Six Senses Spa at Noida will occupy a three-story building.

Over 20 IPOs in 6 month horizon!

RECENT-most IPOs have been sell outs and those who failed to be a part of those need not despair as at least over 20 new issues are lined up in the next six-to-12-month horizon, a scan done by the Daily FT reveals.

Apart from Free Lanka Capital Holdings Ltd, some upcoming IPOs are ‘big ticket’ ones worth over Rs. 4 billion and include Softlogic, SriLankan Catering and Access Engineering whilst the next big one is Expo Lanka Holdings worth around Rs. 2 billion.

There are at least five to 10 new issues each worth Rs. 1 billion or more. Some new issues however would be by way of introduction.

A host of registered finance companies are certain to be listed (either via IPOs or introductions) by June as per Central Bank regulations.

The most immediate IPOs include Vallibel One and SriLankan Catering, followed by Browns Investments, Expo Lanka Holdings and Softlogic, though not in any particular order.

As per the new amendments passed to the Insurance Act, composite companies (i.e. providing both life and general as one company) have to segregate and float and list companies separately.  This will ensure nearly 30 new listings over the medium term.

Amidst the booming number of IPOs and introductions are a host of private placements, whilst several more mandates for listings are being negotiated or firmed up.

All roads lead to bourse!

• 650 CDS accounts opened daily as investors flock to CSE in a low interest rate regime

It appears that all roads are leading to the Colombo stock market, judging by a phenomenal 650 Central Depository System (CDS) accounts being opened daily.

For example, in February there had been nearly 13,000 new accounts opened and this translates top 650 accounts per working day. The February figure of 12,921 was the highest-ever recorded in a month whilst since October last year the monthly figure has exceeded 7,000 accounts on average with November notching slightly over 9,000.

Market sources said that with more Initial Public Offerings (IPOs) on the cards, the number of new investors flocking to the market would soar further.

The rush to open CDS accounts has also constrained capacity at CDS with a backlog, whilst with only three registrars in operation, the massive demand for IPOs has challenged their limitations.

Last year the highest-ever number of new accounts were opened, amounting to 57,093, bringing the cumulative total to 554,000. Already 20,000 new accounts have been opened in the first two months of this year.

The Colombo Bourse, up to last year, has been the world’s most consistent best performing market in addition to being Asia’s best. Improving prospects for companies and the economy post-war as well as the relatively low interest rate regime has encouraged more people to seek fortunes in the Colombo stock market.

In 2010 it provided an average return of over 90% on the back of 125% in 2009 as per movement in the All Share Price Index (ASPI).

The market just concluded its most successful IPO in the form of Union Bank Colombo, whose issue was oversubscribed by a massive 350 times. Its Rs. 375 million IPO drew applications worth a staggering Rs. 131 billion though 80% was via bank guarantees.

Correction or Panic?: Rs. 250 b in value wiped off in a month

Term it correction or panic but the twin feature has wiped off Rs. 255 billion in value at the Colombo bourse in a month.

Successive sessions of decline have reduced the Colombo’s market capitalisation yesterday to Rs. 2,345 billion, down by Rs. 255 billion from its peak of Rs. 2,600 billion on 14 February. The year to date gain of All Share Index has been reduced to 6%, down by a hefty 65% from the 17% + enjoyed as at 2011 Valentine Day. The Milanka Index languishes with a year to date negative return of 6.4%.

Some linked the dip to brokers clearing debt with forced selling to meet with SEC’s end March deadline of 50% exposure whilst others attributed to weakening investor sentiments ahead of the 17 March Local Government elections.

However with yesterday’s dip of 2% in ASI and 1.6% by MPI (as against 2% by both on Monday) buzz within the market was “is the correction” over? With ASPI moving back to 7,000-points level and Market Price Earnings Ratio (PER) dipping to 20 times many think market has come down to its true level. If this view is correct then the Bourse is likely to see a fresh round of buying today.

Two brokers described the dip was partly due to correction and panic selling.

NDB Stockbrokers headlined “Panic selling creeping in” and said the ASPI is heading back towards 7,000 after passing the mark during early January. However the MPI is coming down at a lower rate comparatively, as it remained stagnant during the period in which the ASPI made rapid gains.

“The market needs to stabilise over the next few months as the last few months have been excessively volatile,” NDB Stockbrokers said.

It also said the manufacturing sector was the highest contributor to the market turnover mainly due to Ceylon Grain Elevators. The sector index dropped by 1.37%. Bank, Finance & Insurance sector also contributed significantly to the market turnover with the sector index declining 0.68%. Ceylon Grain Elevators made the highest contribution to the market. The share price decreased by Rs 5.80 (3.38%) and closed at Rs. 165.

Ceylinco Insurance and Lanka Hospitals attracted investors. However, price gains still can be seen in certain illiquid stocks while fundamentally strong stocks are yet to attract investors.

“The indices continued their correction amid low turnover levels with activity dominated by trades on manufacturing counters,” noted John Keells Stock Brokers.

Reuters report said the market closed weaker at a two-month low in thin turnover and volume as investors waited for the bourse to bottom out amid forced selling by brokers.  

“More dip could hurt the market further as investors’ portfolio value will decline and brokers will compelled to sell shares to cover debts, and some brokers’ debts are in the billions of rupees,” a market analyst told Reuters on condition of anonymity.  

SEC has ordered brokers to collect all debts and stop credit transactions by 30 June. They have to cut their current debtors’ positions by at least 50 percent by 31 March.

The main share index closed 1.96 percent or 140.74 points down at 7,029.02, its lowest since 17 January. It hit a record closing high of 7,811.82 on 14 February.  

Foreign investors were net sellers for 7.2 million rupees worth of shares on Monday, and have sold a net 4.3 billion rupees’ worth in 2011, after selling a record net 26.4 billion in 2010.

The bourse has still been Asia’s best performer with a 5.9 percent gain in 2011 after bringing in the region’s top return with 96 percent last year.

Turnover was 1.3 billion rupees ($11.7 million), well below last year’s average of 2.4 billion rupees and this year’s daily average of 3.6 billion rupees.

Traded share volume was 42.3 million, against a five-day average of 34.5 million. The 30-day and 90-day average trading volumes were 68.2 million and 68.6 million respectively. Last year’s daily average volume was 67.9 million.  

Meanwhile the rupee closed weaker at 110.50/60 a dollar from Monday’s close of 110.25/30 on heavy importer dollar demand.