Fifty New Firms To Enter Colombo Stock Exchange In 2011

By Abdul H. Azeez

Around 50 new firms are set to enter the Colombo Stock Exchange in 2011 with 10 Initial Public Offerings (IPO) set to come out in March and April. Securities and Exchange Commission Director General, Malik Cader told reporters that at least two of these issues would be in excess of Rs. 5 billion or $50 million.
In addition, a number of state firms are also expected to be listed in the stock market. The SEC is also looking at current rules on IPO subscriptions where large investors are using bank guarantees to apply for stocks. Small investors have complained that it gives an unfair advantage to large players.
IPOs like the recent Laugfs Gas issue are highly prized and this was evidenced by the sharp increase in the prices of the stock after it hit the market. This results in the initial buyer of the IPO earning large profits. Speaking to reporters, SEC Chairperson Indrani Sugathadasa said, “We are looking at the rule and will soon make a decision.” She also added that differing views exist about allowing more leeway for smaller investors and also accommodating high net worth individuals to protect the interests of the market.
In other news, the SEC said it was relaxing the rules on volatile stocks. Sugathadasa said that the price band that was introduced to ‘capture’ volatile shares would be applicable for 10 trading days instead of 15, from March 1, 2011. The requirement for an upfront deposit of 50 percent when such shares were purchased has also been removed. The rules, introduced in August 2010 were brought about in a bid to ‘discipline’ the market amidst much criticism.