Agarapathana Plantations goes for much delayed IPO with hope of hitting 10 million kilogram tea production

By Hiran H.Senewiratne

One of Sri Lanka’s leading plantation companies, and one focused on innovation and growth, Agarapathana Plantations Ltd., officially announced its Initial Public Offering of Ordinary Voting Shares recently.

“This IPO was delayed by 15 years due to certain conditions stemming from specific requirements. It is a good investment for prospective shareholders of the company, because we are using modern technology to increase the yield and face labour problems, chairman of the company S.D. R. Arudpragasam said at the event, which was held at the Cinnamon Grand.

“Over the last three years the company underwent major transformative changes to enhance the efficiency and effectiveness of the company to reach the entity’s maximum potential of 10 million kilograms of tea production. Now it has reached 7.5 to 8 million kilograms of tea production, Arudpragasam said.

Arudpragasam added: “The IPO involves 83,070,111 Ordinary Voting Shares at Rs. 9 each. The quantity of shares amounts to 16.61 percent of the post-issue Ordinary Voting Shares of the Company. The

Net Asset Value per share of the Equity (NAV) is Rs. 8.43 and the Offer Price is 1.07 times the NAV. Capital Alliance Partners Ltd., is the manager of the IPO.

“Funds raised via the IPO are for investment in modern equipment to develop APL factories into ‘State of the Art – Processing Centres’ (Rs. 672.6 million) and settlement of high-cost term loans worth Rs. 75 million.

“As per Rule 2.4(c) (i) of the CSE Listing Rules, the company is permitted to open the subscription list within a period of 6 months from the date of receiving approval from the CSE. Accordingly, the company will determine the said date of opening (within the aforesaid time period) and notify the same in due course.”

Lankem Developments PLC is the Parent Company of Agarapatana Plantations, holding 67.45 percent of the issued share capital, while related parties are also shareholders.

Agarapathana Plantations Executive Director Kowdu Mohideen said: “We’re pleased to present investors with an excellent value proposition and a compelling discount to the valuation based on the price to earnings and EV/Hectare metrics.

“The funds raised by the issue will go towards factory modernization while also helping reduce borrowing costs. The investor forum will provide an excellent opportunity for the media, and all interested potential stakeholders, and the public, to witness our value proposition first-hand, make any clarifications. We look forward to a lively and engaging event, and heavy interest in our Issue thereafter.”

Informed sources said: “The Company specializes in the cultivation, manufacture and sale of high-quality tea. APL is one of the few mono-crop companies in the plantation sector, with all of the tea extent located in the High Grown districts of Nuwara Eliya and Badulla, which fall within the Western and Uva High elevation categories.

“The Company has plantations located in the Agras valley and Uva regions in Sri Lanka. Properties held by APL include historical properties like Dambatenne Estate, situated in the Badulla district in the Uva Province of Sri Lanka and ranges in elevation from 1509m to 1936m above sea level. Dambatenne is intrinsically linked to the history of Ceylon Tea. It was instrumental in the building of the Lipton Tea Empire and, by association, the legacy of Ceylon Tea.”