31 May 2011

Japanese Fund Management Company in Sri Lanka to Examine Investment Opportunities to Set up Sri Lanka IPO Fund by June 2011

29th May 2011, www.sundaytimes.lk, By Duruthu Edirimuni Chandrasekera

A Japanese fund management company, VEC Investment (Value Ethics Contraction) visiting Sri Lanka this week to examine investment opportunities said that they are setting their sights on forming an initial public offering (IPO) ‘fund’ dedicated to Sri Lanka in a bid to lure Japanese investors into investing in local equities market in addition to listed firms in the Colombo Stock Exchange (CSE).

“We’ll set up a ‘Sri Lanka IPO fund’ by June and we want to facilitate Japanese firms or investors to come into the Sri Lankan share market through this,” Toshiaki Tanaka, President VEC told the Business Times.

He was part of the Tokyo AIM (TAIM) team which is also gauging the potential in the CSE. The team, whose visit was facilitated by local broker New World Securities (NWS), met up with regulators and top corporates.

Mr. Tanaka also said that his company is keen to draw Japanese investor attention to local private placements (PPs) along with the IPOs. “We are preparing to invest in PPs as well and currently we are in discussion with some corporates with regards to PPs,” he added.

Yuki Uchiyama, Corporate Officer, IT Solution VEC, whose specialty is assisting asset management for Japanese IT firms noted that they will bring in many Japanese IT companies to list in the CSE, which will be facilitated by NWS. “Right now the Japanese market is saturated and we want Japanese IT firms to raise money from emerging markets such as Sri Lanka,” he explained. He said the CSE is attractive and also promising for raising capital and this visit has put a positive spin for such business.

Kazunao Sato, Executive Director VEC revealed that they are targeting to invest in logistics such as cold storage business at the Hambantota Port. He added that temperature-controlled warehouse logistic firms from Japan are interested in setting up a logistics plant for refrigeration, storage, etc. “We are also extremely keen to explore tourism and the telco sectors,” he said, explaining that acquisitions, mergers and joint ventures are being discussed pertaining to such investments. He added that currently a similar partnership is being explored through VEC by a Japanese firm for an investment opportunity in a local travel firm.

Mr. Tanaka added that by early next month a high powered investment team is due in the island as a result of the contacts this delegation made along with NWS during the 3-day visit. “Some top officials in major share broking houses, asset management companies will come in to Sri Lanka in two week’s time to discuss business opportunities,” he said.

Yutaka Ito, COO, TAIM joining in the discussion told the Business Times that Sri Lanka’s GDP rate is ‘fantastic’. “Our main mission is to introduce Tokyo Stock Exchange’s (TSE) equity and bond markets to the Sri Lankan investors. TAIM is a good path to raise money for firms in Sri Lanka,” he explained.

He said that listing in Tokyo AIM helps firms to grow their business through access to a wider layer of funding options and an easier way to bring in fresh capital into firms. Mr. Ito explained that TAIM discussed local firms’ listing in Tokyo AIM. He noted that there’re no minimum requirements for market capitalisation or free float for a company to list on Tokyo AIM.

The listing company structure can be arranged on a case-by-case basis. Mr. Ito added that TAIM wants to facilitate Japanese bond investors here through a fixed income market called T-Pro Bond. He also noted that the CSE is not over valued, but foreign participation is important to expand the CSE.

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