CSE News Updates

• Debut of diversified holding marred by slew of events
• Dubious buy order of 25 m shares at 10 cents each detected and purged by CSE; Sell orders amounting to 45 m shares early morning
• Private placement investor Carson Group books profit by part selling stake at prices below Rs. 20
• New blue chip first in recent years to trade below IPO price; ends maiden day trading down 36% largely linked to pricing fiasco
• Overall 21 m shares change hands via 3,904 trades for Rs. 418.4 m
• Chairman Ashok Pathirage defends stock by buying 5.5 million shares

An alleged sabotage as well as other negativities marred the debut of Sri Lanka’s latest conglomerate Softlogic Holdings yesterday on the Colombo bourse.
Despite its profile as one of the fastest growing diversified holdings, Softlogic had to contend with its share price trading below IPO price, unseen in the market for some time. Even before the trading began, there was drama.

The Daily FT learns that a dubious buy order for 25 million shares at 10 cents each was detected and subsequently purged. If that was a relief, more was in store.  When the market opened, Softlogic was faced with sell orders amounting to 45 million shares. Its first trade was a block of 279,800 shares executed via 62 at Rs. 25 per share, lower by Rs. 4 from its IPO price. Thereafter, two million shares were done at Rs. 24 via four trades. Overall 21 million shares changed hands via 3,904 trades for Rs. 418.4 million. Softlogic’s highest price was Rs. 25 and the lowest was a disappointing Rs. 16.20 before closing at Rs. 18.10, down by 37.6% or Rs. 10.90 from the IPO price.

The timing of Softlogic’s debut couldn’t have been much worse. On Monday the market lost Rs. 51 billion in value. Like Expolanka Holdings’ huge difference in pricing between sell down and IPO, Softlogic’s too had been under criticism. Expolanka’s was 133% whilst Softlogic’s was 303%.
Managers to the sell down and IPO would vouch that private issues were a hard sell at a time when the market wasn’t bullish whilst subsequent performance and future earnings forecasts had been higher as well, warranting different pricing.

The sell orders of 45 million shares may have scared off the rest of the market, whilst there was fear that some of those who took part in the sell down would exit as well, pocketing whatever profit.
To some degree this happened and the most notable party was none other than Carson Group. Some estimated it sold around nine million shares whilst others said it was only six million out of an estimated 30 million holding.

Whilst those who advised Carson’s part sale justified the move saying it had a high target price, the selling was not at the start but much after the slide. This they said to ward off criticism that it was being greedy. If the Carson sale is discounted, there were still more sellers, perhaps mostly very short-term retailers.

Softlogic Chairman Ashok Pathirage, like in the case of Vallibel One Chairman Dhammika Perera and Executive Deputy Chairman Nimal Perera, was on the buying side – perhaps to defend the price. Market talk was that Ashok bought 5.5 million shares of his own company whilst Dhammika and Nimal disclosed that when Vallibel One debuted, they too collectively bought around 1.5 million shares. Softlogic also saw some foreign buying, which is encouraging.

Source : www.ft.lk