Lanka Realty
Investments Plc (LRI) – a Sri Lankan based investment management company has
recently concluded the largest-ever acquisition share swap, which is estimated
to be worth circa LKR 5.6 billion.
LRI is a listed
firm on the CSE in Sri Lanka, with operations spanning over five decades. The
firm was subject to a takeover in 2017 by a consortium of British and Sri
Lankan investors with the mission of becoming the market leader in real-estate
based investment management.
Before being
acquired, LRI raised LKR 633 million through a rights issue in October last
year, and they have now completed a share swap acquisition of six private
companies that are into commercial real estate, residential housing and tourism
and leisure sectors. Hence, LRI is moving closer to achieving the ultimate goal
of leading the pack, expanding its footprint in the local market,.
Through the acquisition-based
share swap, LRI managed to issue over 149 million ordinary (voting) shares to
the shareholders of the six companies at a published share price of LKR 37.52. Post-
acquisition, LRI now has a full controlling stake in 11 companies that are
majoring in commercial real estate, residential housing, property banks,
tourism and manufacturing. Hence, the
mix of operational, growth and land-based assets is anticipated to improve
yields to LRI Group shareholders further down the line.
The Group owns
8.4 acres of freehold property in Colombo with a planning permit for the
development of 1,649 housing units, an approximately 100,000 ft office building
in Colombo 10, three operating boutique hotels and villas in Colombo, Weligama
and Ahangama with 44 rooms, two recreational development projects under
construction for 30 apartments in Yala, and 53 offices in Ambalangoda.
OSL Take: The recent share-swap based acquisition by LRI
is anticipated to increase foreign investor interest in Sri Lankan businesses for
M&A deals due to the confidence that LRI is signalling to the global
investors to participate in investments in Sri Lanka. Further, the share swap
acquisition concluded by LRI would open the private equity space in Sri Lanka
for investment banks such as JP Morgan, Goldman Sachs, and Credit Suisse who
are currently targeting companies in South Asian Tiger economies.
VBS/AT/20191101/Z_TB5
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