From left: Myland Development Managing Director Nalin Perera (centre) briefs the media yesterday on the upcoming IPO. Others from left: Myland Development Independent Director Ajith Alahakoon, Executive Director Iresha Dissanayake, Chairman W.D. Premachandra, Atarah Capital Partners (Manager to the Issue) Vice President Chandana Wijesundara and Managing Director Rohan Senewiratne at the media briefing yesterday
By Darshana Abayasingha
Small and medium sector real estate developer, Myland Development Ltd., yesterday announced the launch of its Initial Public Offering (IPO) on the Colombo Stock Exchange seeking to raise Rs. 75 million through the divestiture of a 17.24% of the business.
Myland will list 6,250,000 ordinary voting shares on the IPO at Rs. 12 per share. The official opening of the IPO is 8 December while it is up for subscription from yesterday.
Myland will join a handful of dedicated real estate developers to be listed on the Colombo Stock Exchange, and is probably the only player from the SME sector. With its origins in the Gampaha District, analysts view Myland’s move to list as a positive indicator of organisations and entrepreneurs outside the traditional confines of Colombo’s business district turning to listing to generate equity.
“Bank funding has cost us high interest costs, hence we decided to diversify our funding options by enhancing our equity capital. Being and SME and in our growth stage, we are unable to sacrifice much of our profits as interest payments to banks. As a listed entity we believe there will also be greater confidence amongst customers and stakeholders due to greater transparency.
“Rapid urbanisation, expressway development and much higher returns from land investments than long-term fixed deposits, are some reasons for increased demand for land. We hope to capitalise on these for our future growth,” Myland Developments Managing Director Nalin Perera told the media yesterday.
Since its incorporation in March 2017, Myland Developments has completed 23 land development projects by September, with all plots developed and sold successfully. Three projects are going on at present in Dompe, on a land of 254 perches, Divulapitiya on a land of 720 perches that will be available for sale prior to the IPO. A third project is underway in Gampaha.
Myland Developments recorded revenue of Rs. 168 million and Profit After Tax (PAT) of Rs. 26 million in the 2020/21 Financial Year. This was a significant improvement from Rs. 121 million Revenue and PAT of Rs. 3 million recorded the previous financial year, with negative sentiments stemming from the ‘Easter Attacks’ impacting financials, the company said.
Myland has strengthened its performance in the first six months half of the current financial year, recording revenue of Rs. 119 million, a 381% increase over the corresponding period year-on-year.
“The most common method of raising capital is bank loans, especially in the SME sector and functioning outside of Colombo. We had an event to explain the benefits and process of listing, and Myland was interested in this call. We look at the structures of the organisation and determine if the company is ready for listing.
“We worked with Myland for about six months and doing the necessary preparation and scrutiny, and once we were convinced, they were ready to embrace the culture of a listed organisation, we submitted an application to the CSE,” said Managers to the IPO and SME-listing specialists Atarah Capital Partners Managing Director Rohan Senewiratne.
The Myland IPO is not underwritten. Senewiratne averred that being an SME and with leaner operating structures, this poses a degree of less risk for investors and encouraged more SMEs and investors to look at such listings on the CSE.
“Amidst rising interest rates, the funds raised via the IPO facilitates the company for expansion,” Myland Developments Chairman W.D. Premachandra said. “The listing is also expected to assist in further amplifying our brand and developing an island-wide presence, through a portfolio of developments across the country.”
“As a listed entity, we are bound to have improved corporate governance structures, which will assist the company in long term business sustainably and also protect the interests of minority shareholders,” Premachandra added.