World’s top Investment Bank – Citigroup invests in Sri Lankan Company

Global Markets Limited of the Citi Group acquired a 22.6 billion rupee stake in John Keells Holdings Plc from Malaysia's Khazanah Nasional Berhad sovereign wealth fund Thursday, market sources said. Sources said Citi Group had bought the stock on behalf of a long-term multinational institutional investor. CT CLSA was brokering the deal, a market filing said.

The 141.9 million shares, totaling 10.8 percent, had been purchased at 160 rupees, 1.10 rupees below the first level, and the percentage of John Keells Holdings (JKH) shot up to 164 rupees after the trade. Khazanah had invested in JKH through the Broga Hill Investments Limited investment vehicle and held the second-largest stake behind 11.4 percent for Sohli Captain.

Thursday's selling follows a Wednesday market correction after a 7-month boom when Colombo's stocks fell 2.64 percent. On Wednesday, the JKH share fell 1.80 rupees to 161.10. The share had risen by mid-May, at the tail end of the retreat following the Easter Sunday bombings, from 135 rupees a share.

JKH is the biggest listed company in Sri Lanka. The business is well-diversified, with the most extensive travel and hospitality, properties, logistics, banking, information technology, food and beverage, and retail operations.

In 2012, Khazanah had joined JKH, buying an 8.8 percent stake, or 74.5 million shares, for 14.5 billion rupees at 194 rupees. Most of the stocks purchased from the State-managed pension fund, the Provident Fund for Employees, in 2012.

Market sources said the JKH share had peaked at 298.60 rupees since the Khazanah investment on May 20, 2012, ahead of rights and warrants issues which followed to finance the group's flagship mixed development property Cinnamon Life.

After the re-election of Mahathir Mohamed as Malaysia's premier in 2018, Khazanah restructured its portfolios under a new strategy launched in 2019. Khazanah sold the foreign investment to offer cash to the government to help minimize a fiscal deficit and stabilize the state investment fund scandals 1Malaysia Development Berhad, reported by international media.

OSL Take: The news that the world’s largest Investment Bank - Citigroup had increased its equity investments in Sri Lanka in 2019 is indicative of the development and growth of the Sri Lankan economy. This news should add to the confidence of foreign businesses/investors to explore business/investment opportunities in Sri Lanka.

The investment in Sri Lanka by one of the USA’s largest investment banks in the world will increase Private Equity FDI to Sri Lanka and further would boost investor confidence in the Asian Pacific region. The island continues to maintain its name in the top ten destinations to outsource business operations. All this will result in further expansion in business/investment opportunities in Sri Lanka’s economy.

VBS/AT/20200306/Z_TB6