Agarapatana Plantations announces IPO to raise Rs.748mn

The Colombo Stock Exchange (CSE) has approved in-principle Agarapatana Plantations Pvt Ltd ‘s application for listing its ordinary voting shares on the Diri Savi Board by way of an offer for subscription.
The company plans to issue an offer for subscription of 83.07 million new ordinary voting shares amounting to approximately 16.61 percent post-IPO, at an offer price of Rs.9 per share to raise Rs.747.63 million.

The company hopes to utilise the money raised via the IPO in modern equipment to develop its factories to “state-of-the-art processing centres” by gradually replacing old machinery with modern equipment and settlement of high-cost term loans. 

Minimum subscription per application is 100 shares. Applications exceeding the minimum subscription should be in multiples of 100 shares and each successful application shall receive the minimum subscription.

Capital Alliance Partners Limited is acting as Managers and Financial Advisors to the issue. According to calculations by Capital Alliance Partners Limited, a share of Agarapatana Plantations has been priced at a 16 percent discount to the simple average of PER, P/BV and EV/hectare valuations.

For the nine months ended December 31, 2022, the company’s revenue rose by 93 percent YoY to Rs.6.38 billion.  During the same period, the company recorded a net profit after tax of Rs.1.88 billion compared to a net loss of Rs.43.93 million in the corresponding period in 2021/22 FY.

The company’s debt-to-equity ratio was 1.13x as at December 31, 2022. With the settlement of the loans with IPO proceeds, the debt-to-equity ratio is expected to improve to 1.11x.
As per current shareholding structure, Lankem Developments PLC holds 67.45 stake in the company followed by 6.37 percent and 5.88 percent stakes by E.B. Creasy & Co. PLC and Secretary to the Treasury. 

Incorporated in 1992, Agarapatana Plantations Limited is a mono-crop, tea only plantation and is one of the largest plantation companies in Sri Lanka with 21 tea estates spread across the high-grown region of Agras Valley located in the Dimbula district of Nuwara Eliya and in the Uva district of Haputale. 

The company has a land extent of around 10,000 hectares with a mature extent of over 6,000 hectares for tea cultivation. 
The company has over 14 fully equipped factories which manufacture and handle the entire tea production process. Additionally, there are three factories that process refuse tea.