JKH secures US $ 80mn ADB investment

• JKH to issue up to 122.5mn new shares to ADB via private placement 
• Proceeds to be invested to expand supermarket business
• Vote of confidence on company and country, says JKH

John Keells Holdings PLC (JKH) yesterday announced plans to raise US $ 80 million via a private placement to the Asian Development Bank (ADB) by issuing up to 122.5 million new ordinary shares of the company to fund the investment plans of its supermarket business.  In a stock filing yesterday, JKH stated that the proposed private placement, which would be a maximum post-issue dilution of 8.5 percent, is to be completed in two phases.

“The proposed private placement would be for an upfront issue of ordinary shares (Initial Placement Shares) for an initial issue size of the LKR equivalent of US $ 50 million (Phase 1). At the time of issue of the Initial Placement Shares, the company will also issue to ADB non-tradable/non-transferable options (Options), which will entitle ADB, at its option and discretion, to subscribe for additional new ordinary shares of the company (Option Shares) within a period of 12 months from the date of subscription for the Initial Placement Shares, for an investment amount of up to the LKR equivalent of US $ 30 million (Phase 2),” the filing said.

The proposed private placement is subject to the approval of the company’s shareholders, Securities Exchange Commission (SEC),  Colombo Stock Exchange (CSE) as well as the approval of ADB’s board of directors.
JKH highlighted that the partnership with a globally reputed financial institution such as ADB, which comes at a critical juncture, where Sri Lanka is facing acute foreign exchange difficulties, would be a vote of confidence for JKH and the country.

The proceeds are expected to be utilised to fulfil investment plans for the Keells supermarket chain, where JKH plans to open around 75 new outlets by FY2023/24, reaching 200 outlets.

“The proceeds from this transaction will be utilised for the purpose of corporate level balance sheet support towards funding its investments in the ‘Keells’ supermarket business,  which includes the long-term outlet expansion plan, 

including construction and equipment, start-up expenses and the construction and equipping of the supporting logistics infrastructure to facilitate this,” the company noted.

Keells, which is the second largest private sector-owned modern retail network in the country, had 124 outlets as of September 30.

Moreover, the ADB funding is also expected to provide the much-needed leeway to JKH to manage the foreign currency commitments of the group’s landmark projects such as the Cinnamon Life integrated resort and West Container Terminal in the Port of Colombo.  JKH recently committed to invest US $ 70 million in the 3.2 million TEU West Container Terminal of the Port of Colombo, in a joint venture with India’s Adani group.

In addition, JKH also hopes to leverage on ADB’s technical expertise and advisory to enhance and further strengthen the group’s existing environmental, social and governance processes and frameworks.