Finance Issue

Mar 24, 2010 (LBO) – An initial public offer of shares by Sri Lanka’s Vallibel Finance is seen as being priced to a discount to market given its immediate earnings record, Capital Alliance, the issue’s placement agent, said. Vallibel Finance seeks to raise 114.4 million rupees by selling 5.2 million shares at 22 rupees each. The issue opens on March 31

The firm is part of the Vallibel group of entrepreneur Dhammika Perera who is selling down a 25 percent stake through the IPO in the Colombo Stock Exchange’s main board.

In 2009 nearly 60 percent of Vallibel Finance’s interest income came from hire purchase business with a large part of lending taken up by motor vehicles.

Capital Alliance said in its statement that at 22.00 rupees, the IPO is at a Price:Earnings Ratio (PER) of 6.8 times 2011 forecast earnings.

Capital Alliance said its own valuation at a PER of 9 times 2011 earnings was 29.10 rupees, representing a potential gain of 32 percent.

“The issue aims to enhance business volumes and reduce the interest rate risk and gap exposure based on its higher leverage capacity after the IPO,” the Capital Alliance statement said.

“In addition, the company hopes to improve credit ratings via a gr