Grand Hyatt Colombo gets Rs.2bn fresh capital infusion from SLIC

20 July 2021 08:58 am Views - 2373

• SLIC as the largest shareholder owns 46% of project company
• Fresh infusion comes in the wake of SLIC reporting record profits 
• When project company was incorporated, SLIC was reported to have infused Rs.8.5bn in equity
• Grand Hyatt Colombo project now listed under Selendiva Investments 

Canwill Holdings (Private) Limited, a joint venture company established to develop Grand Hyatt Colombo project has received fresh capital infusion to the tune of Rs.2.0 billion from Sri Lanka Insurance Corporation (SLIC), its largest shareholder. 

Canwill Holdings is a State-owned joint venture company set up under the tenure of the previous Mahinda Rajapaksa administration to undertake the Hyatt hotel projects in Colombo and Hambantota before the good governance regime, which came to power in 2015 scrapped the Hambantota project, while diverting funds worth Rs.4.0 billion earmarked for the Colombo project. 

When the property development company was set up, SLIC held 46 percent stake, while the balance was held equally between Litro Gas Lanka Limited and the Employees’ Provident Fund (EPF). 

Grand Hyatt Colombo project is undertaken by Canwill Holdings’ subsidiary, Sinolanka Hotels & Spas (Private) Limited. 

SLIC made this fresh capital infusion in May after the State insurance giant reported a before-tax profit of Rs.7.5 billion for the four months ended in April 2021. 

SLIC saw its revenues rising by a robust 47 percent to Rs.19.1 billion in the period under consideration compared to the same period in 2020, as the broader insurance sector became a beneficiary of the conditions created by the pandemic. 

As a result, the company expanded its total asset base to a massive Rs.243 billion by the end of April 2021. When Canwill Holdings was incorporated, SLIC was reported to have infused Rs.8.5 billion in equity while the two other shareholders chipped in with Rs.5.0 billion each. 

However, as the project led to massive cost overruns and repeated delays, the government in December last year extended the project completion deadline till December 2022. It also listed Canwill Holdings with a few other companies, which hold key State real estate and properties in Colombo under a new entity called Selendiva Investments Limited. The government plans to list part of Selendiva Investments on the Colombo Stock Exchange in a bid to reform State-owned enterprises and also reduce their dependency on the State coffers. 

However, last week a Fundamental Rights petition was filed in the Supreme Court, fixed for September 21, seeking an interim order preventing the Treasury from selling, leasing or alienating State properties vested in Selendiva Investments Limited.  The 47-storey Grand Hyatt Colombo comprising 475 rooms and 84 service apartments along Galle Road in Colombo 03 was initially due to be completed in two years from July 2012, and the massive delays and other alleged irregularities doubled the cost from Rs.30 billion to Rs.60 billion.