Carson group private equity arm writes off Rs.52.4mn as two investments go bust

Guardian Capital Partners PLC, the specialized private equity investment arm of the Carson group, has incurred an impairment loss of Rs.52.4 million for the financial year ended March 31, 2018 (FY17/18), with two of the start-up companies the firm had made investments going bust.

Terming FY17/18 a challenging one, Guardian Capital Chairman I. Paulraj said, “Whilst no new deployments were made, the company had to make an impairment loss amounting to Rs.52.4 million during the year, due to two investee companies discontinuing business.”

The two companies were Swiss Institute for Service Industry Development (Pvt.) Ltd and Kashmi Singapore (Pte) Ltd.

Due to the impairment loss, Guardian Capital ended up making a Rs.22.6 million accounting loss and a total comprehensive loss of Rs.38.8 million. As a result, the net asset value per share decreased to Rs.26.75, a 5.8 percent reduction compared to last year.

Guardian Capital had to fully provide for the investment of Rs.42.1 million it made in Swiss Institute as the operations of the company were discontinued due to an alleged misappropriation of funds.

Swiss Institute was a start-up venture set up to provide vocational training to the hospitality and banking sector.

“Legal proceedings are underway and further necessary action on the position will be taken based on the progress seen in the same,” Guardian Capital’s latest annual report released to the Colombo bourse this week, noted.

Meanwhile, the company also had to write off an investment of Rs.10.3 million it had made in Kashmi Singapore, a start-up fintech firm, founded by a group of Sri Lankans that operated out of Singapore.
“The company required further funds to be raised in order to fund product development. Although the company was successful in developing the digital banking product and was successful in signing up a leading commercial bank to roll out the platform in Sri Lanka it was unable to raise a new round of funding and hence had to close down operations,” the annual report noted. 

Guardian Capital’s total investment portfolio as at March 31, 2018, stood at Rs.686 million, out of which Rs.298 million was deployed into investments while the balance was held in short-term investments and cash.

The company has a 15 percent holding in LVL Energy Fund Limited, the largest in its portfolio, with an investment of Rs.102 million. It also has investments in hSenid Business Solutions, Findmyfare, Access Engineering and Expolanka.

For the FY2017/18, Guardian Capital incurred a net loss of Rs.22.6 million, against a net profit of Rs.36.1 million a year ago. The loss per share for the period stood at 88 cents compared to the earnings per share of Rs.1.40 reported for the previous year.

Paulraj said due to the losses, the director board has decided not to declare any dividends for the year under review.