The Colombo Stock Exchange (CSE) currently showcases a diverse portfolio of over 285 listed companies across 20 GICS industry groups. This powerful source of capital raising is attracting more attention among Sri Lankan corporates of all scales, as an opportunity to benefit from financial flexibility, improved access to capital, increased global profile and access to liquidity. The ability to tap into global capital without the restrictions inherent in traditional lending terms is a powerful tool and attractive proposition.
The shares of WindForce Ltd (Ticker: WIND.N0000) commenced trading on the Colombo Stock Exchange (CSE) recently on the Main Board of the CSE under the ‘Utilities’ sector. The listing was followed by a remarkable Initial Public Offering (IPO) by the company, through which it raised LKR 3.2 billion through a share issue of 202.6 million at an issue price of LKR 16.00 each. The issue set a robust cornerstone with an oversubscription of approximately 8 times within the first day of its offer. The IPO was recorded as the largest capital raising since 2011. Manjula Perera - Managing Director of WindForce Ltd shared the company’s experience of listing on CSE.
1. Raising funds via the exchange is an effective alternative to traditional funding means. What were your reasons for accessing funds for growth via the public market?
WindForce entered the Renewable energy business 11 years ago with two traditional family-owned companies becoming the major shareholders. Down the line, while the company was growing at a rate, many local and foreign investors joined as minor shareholders. WIND made a commitment to these minor shareholders that when the time was right, we would take the company public. This way shareholders will have the flexibility and option of increasing their shareholding and also to exit when needed.
Listing was to gain access to capital markets, consistently increase the acquisition of additional capital, conduct mergers and acquisitions, and to reward employees with equity-based incentives.
2. At what point of the growth curve do you think a company in a similar market as yours should consider listing?
Once the company has reached critical mass and it has become relatively easy to determine its medium-term growth forecast separately, that may be the right time for listing. Lately, WF expanded the business in the international markets as well. Listing is a better tool for faster growth in international markets.
3. In the local context, there is a hesitancy to access funds via the exchange. What do you think those reasons are and how would you address them for those on the fence?
We feel the prime reason being the time taken for processing of the listing application in the past. Now it has improved immensely. Ours took only 03 weeks. A record time. The present efficiency needs to be further communicated to local businesses. Also cost involved in listing and post listing also could be a consideration.
4. How should companies view organizational structure pre-IPO in order to ensure success post-IPO?
Many structural changes are to take place. Some of the key been bringing in good governance practices, Brand Awareness, reporting structures, HR functions, employee confidence etc.
5. Has the transformation into a public entity reinforced or strengthened any practices at your company?
It’s a definite YES.
6. Can you share your thoughts on the importance of effective communication regarding your future plans with your shareholders post-listing and how that reinforces the success of the share price?
This we consider a must to maintain a stable share price. We consider social media as a strong tool to be used to reach out to shareholders in the present context.
7. CSE provides access to raise funds globally. Do you have any thoughts or experience on how foreign investors add value to your company?
Out of our IPO as well as post IPO a considerable share purchase was by foreign entities.
This adds a significant value to our company when raising funds for future projects. Especially for foreign project debt raising through foreign banks and DFI’s.
8. The CSE has relaxed the regulatory framework to facilitate more listings. Would you like to comment on it?
This is a great move. Especially the opportunity offered to smaller businesses on the Empower Board.
9. How vital is it for an organization to manage its debt-to-equity ratio?
For our business we have easy access to debt since the electricity sale is guaranteed for 20 years through a Power Purchase Agreement by the respective utility. So, maintaining a steady debt to equity ratio is not a challenge.
10. How has your company adjusted to the current global environment?
Our business is the sale of electricity to utilities through Renewable Energy Sources. We are the least affected business with the current global environment.
11. How do you foresee the growth of your company going forward?
Are there any specific opportunities or initiatives you are exploring and would like to share with the investing public?
Our present revenue ratio is roughly 70:30 local to foreign. Our target is to change this ration to 60:40 local to foreign. We target our growth in international markets like the African region, Bangladesh, Pakistan, Vietnam while maintaining a steady growth locally as well.
The Colombo Stock Exchange encourages companies to explore the opportunity provided by the exchange to meet financial goals. Please reach out to Mr. Purasisi Jinadasa, Head of Origination and Issuer Relations at CSE to better understand the opportunities.
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