Seylan(Sri Lanka) share issue eyed by foreign funds

Sept 06, 2009 (LBO) - A 54.2 million sale of fresh voting shares in Sri Lanka's Seylan Bank to raise 1.9 billion rupees, after it was put under new management by regulators, has attracted the interest of foreign funds, a top official said.
Seylan voting shares closed at 33.00 rupees Friday and non-voting shares at 12.0. The issue is not underwritten, but officials say there is an appetite for the share among foreign institutional investors who want to buy into a sizeable stake in a Sri Lankan bank. "Several foreign funds have expressed interest in buying a stake," chairman Eastman Narangoda said.
Under Sri Lankan banking law, which is makes take-overs and restructuring of banks difficult, a single shareholder can only hold 10 percent of a bank, though its enforcement has been questioned.
Seylan is offering 54.29 million shares at 35.00 rupees each to the public to raise 1.9 billion rupees in an offering that opens on September 21.
It is also placing 13.0 million voting shares with state-run Bank of Ceylon to raise 450 million, and 19.15 million shares with Sri Lanka Insurance Corporation to raise 675.25 million rupees.
After the issue the bank will have 130.0 million voting shares, 123.56 million non-voting shares and 3.3 million non-convertible, non-redeemable preference shares.
Seylan was taken over by regulators and put under an independent board after a the collapse of Ceylinco group firm last year triggered a run on the bank.
The Ceylinco group controlled the bank through its own shares as well as through employee share trusts, which was controlled by the management. After the share issue, the voting shares controlled by the share trusts will fall to 9.0 percent.
For the 6-months to June the Seylan Bank group made a profit of 188.0 million rupees. At bank level, profits were 137.8 million rupees.
In the quarter to June the group profit was 187.8 million rupees. At bank level the profit was 93.9 million rupees.
Officials say the bank has raised 4.0 billion rupees in fresh deposits following a recent marketing drive, its liquid assets are above regulatory requirements and after the share issue, it will also meet capital requirements.