Sri Lankan shares fall, Arisaig Fund sells stake in Richard Pieris

Aug 07, 2008 (LBO) – Sri Lankan shares ended weaker Thursday but turnover was pumped up by the sale of a big stake in Richard Pieris & Co held by Arisaig India Fund, brokers said. “It’s only the company’s plantations which are doing well,” he said. “Also, Richard Pieris is a highly geared company, having to bear high interest costs. It’s very difficult to drive a company in this high interest rate environment.”

In other trading, there was a crossing of 1.18 million shares of Watawala Plantations at 85 rupees a share.

Liyanage said the overall market was likely to remain dull but there was interest in plantations stocks as low grown teas and rubber have been doing well.

“In the second quarter there should be an improvement in plantations companies which have rubber and low grown teas because low grown tea prices and rubber prices went up.
So we can expect improved performance in plantations companies which have low grown tea and rubber.”

There were also two crossings of John Keells Holdings both at 103.50 rupees.

The overall market was dragged down largely by the fall in the share price of Dialog Telekom, which has a heavy weighting in the index.

Dialog ended down 1.85 percent or 25 cents at 13.25 rupees with 211,300 shares traded. Carson was down 1.93 percent or 4.75 to 242 rupees, Distilleries fell 1.40 percent (1.25 rupees) to 88 and DFCC ended down 1.70 percent (two rupees) to 115.50.

LIOC was the most actively traded stock of the day with over 1.7 million shares done after its earnings outlook improved with the fall in crude oil prices.

LIOC gained 2.08 percent (50 cents) to 24.50 rupees The All Share Price Index closed down 0.26 percent (6.32 points) at 2,465.48 while the Milanka fell 0.49 percent (14.37 points) to 2,935.02.

Turnover went up to just over a billion rupees with half of it accounted for by the Richard Pieris deal.

Arisag sold a14.8 million block of shares or 11.6 percent stake in Richard Pieris at 35 rupees per share just after 11 a.m. in a deal worth 554.8 million rupees.

The fund had a total of 15.6 million shares or 12.19 percent in Richard Pieris as at March 31, 2008.

In the day’s trading, Richard Pieris led the declines as it fell 9.09 percent or four rupees to 40 rupees, according to the volume weighted average. It was the most actively traded stock in terms of volume.

“Only small volumes are trading at 40,” said Srimal Liyanage of Lanka Securities said. “It would be very difficult to sell a large quantity at 40.”

He said Richard Pieris was not performing well right now and was selling some of its smaller firms to focus on its core business.