Rs. 8 billion NDB right issue seen as market stimulant

By Hiran H.Senewiratne 

An NDB right issue worth Rs. 8 billion will provide an impetus to the CSE in the present highly volatile market situation, stock market analysts said.   

In the foregoing context, it is said that 17.1 million rights (allotments) were traded between a high of Rs. 2.10 and a low of Rs. 1.60 before closing at the latter level. This was on top of five million traded the previous day.The NDB rights issue involves selling 106.78 million shares on the basis of 28 new shares for 61 held at Rs. 75 each. Analysts said that investors were willing to pay a premium in order to qualify for the upcoming rights. It reflects their keenness and confidence. Last date for renunciation of rights is May 4.The purpose of the rights issue is to strengthen the bank’s Tier 1 capital base to facilitate its asset book growth.NDB is also offering 37.67 million new shares (9.9% stake) by way of a private placement at Rs. 85 per share to Norwegian development finance entity Norfund, boosting the Lankan bank’s growth and expertise to empower the private sector. 

Norfund, under the deal, will be making its maiden equity investment in Sri Lanka. It will be also the first investment in Asia in 2021. It is NDB’s first foreign equity placement agreement.

Amid those developments the CSE was highly volatile yesterday, swinging between positive and negative territories. Consequently, both indices moved downwards. All Share Price Index went down by 23.24 points and  S and P SL20 declined by 12.13 points.

Turnover stood at Rs 2.52 billion with a single crossing. The crossing was reported in HNB, which crossed 205,000 shares to the tune of Rs 26.7 billion; its shares traded at Rs 130.

In the retail market, five companies that contributed to the turnover were, HNB Rs 884 million (6.5 million shares traded), Royal Ceramic Rs 282.2 million (8.06 million shares traded), Browns Investments Rs 241.4 million (38.1 million shares traded), Expolanka Rs 239 million (five million shares traded) and Dipped Products Rs 105 million (1.9 million shares traded). During the day, 100 million share volumes changed hands in 15043 transactions.