The much-awaited initial public offering (IPO) of the ordinary voting shares of Agarapatana Plantations Limited will open today, at 9:00 a.m.
The issue is expected to see active interest from across a wide spectrum of local and global individual and institutional investors.
83,070,111 or 16.61 percent of the ordinary voting shares of Agarapatana Plantations Limited will be on offer to the public today, at an issue price of Rs.9.00 per share, with the company seeking to raise a total of Rs.747.6 million through public investment and a listing on the Diri Savi Board of the Colombo Stock Exchange.
In its prospectus, the company has outlined its intended objectives for the capital it hopes to raise today. Accordingly, Agarapatana Plantations Limited intends to utilise Rs.672.6 million to develop its factories into state-of-the-art processing centres, investing in new technology by gradually replacing old machinery with modern equipment, while Rs.75 million will be allocated for the utilisation towards the retirement of selected high-cost term loans, enabling the company to drastically reduce its financing costs,
freeing up capital and cash flows that can be more productively utilised elsewhere.
“In terms of value, the issue presents a compelling valuation discount based on P/E and EV/hectare metrics. This combined with the company’s commitment to sustainability and ethical practices will likely enable considerable growth in the coming years,” a press release issued by the company said.
Agarapatana Plantations Limited is mainly focused on the growing and production of Ceylon Tea and maintains well-established garden marks at the Colombo Tea Auction, in the coveted Western-High and Uva-High elevation categories.
The company is also able to scale production further through access to green leaf from smallholders in the regions it operates.
There is also significant potential for the company to generate value through tourism, with it already having developed the historical site of Lipton’s Seat, which presently accommodates many visitors.
With a number of its plantations in close proximity to other tourist attractions and hotspots, including Haputale, the 9-Arches Bridge, Ella, Ravana Ella and Horton Plains, amongst others, the company is well-positioned to take advantage of the emerging boom in tourism.
Committed to renewable energy and promoting sustainable practices within the industry, Agarapatana Plantations Limited is also looking to maximise its power generation capacity and reap the economic and environmental benefits.
The company already generates hydropower through its plant on the Diyagama West Estate and is considering expanding the facility by a further one MW.
