22nd June 2011, www.dailynews.lk, By Sanjeevi Jayasuriya
The country's first ever IPO fund was launched yesterday with focus to broadbase investor strength especially regarding retail investors. The Fund will invest only in IPOs in Sri Lanka providing an opportunity for the retail investors to increase their share purchasing powers at IPOs.
We do not invest in the stock market and the investors are guaranteed a fixed return on their investment, Ceylon Asset Management Managing Director Dulindra Fernando told the Daily News Business.
“Asia has a fast growing IPO market with two third growth coming from this region. The IPO companies represent new Sri Lanka and there will be an IPO boom in the country in the next five years,” he said.
The lull period in the Sri Lankan IPO market for the past decade due to war is now having an upward movement and there are a large number of IPOs in the pipeline.
“These companies secure funds to expand in the fast growing sectors in the Sri Lankan economy and markets. This will fuel the golden era of fast GDP growth, ” Fernando said.
The fund will offer direct exclusive opportunity for retail investors where its returns will not be subject to the volatility in the stock market. A special promotional offer of Rs 1,000 investment will be there to encourage the retail investors where the Units are offered at Rs 10 each.
Ceylon Asset Management (CAM) and Deutsche Bank AG have joined hands to launch the IPO Fund to exploit an opportunity created by the Security Exchange Commission of Sri Lanka (SEC).
The SEC has passed legislation that reserve 10 percent of each IPO for eligible Unit Trusts.
The tax-exempted Unit Trust is designed to safeguard capital investors while generating tax-free interest income by investing all excess cash in short term fixed income instruments.
The Fund will accept investments upto a maximum of Rs 10 million where several high profile IPOs are expected during this year.
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