Monday, October 2, 2023

Agarapatana Plantations IPO Opens Today with Active Interest Expected

The much-awaited Initial Public Offering (IPO) of Ordinary Voting Shares of Agarapatana Plantations Limited will open today, 10th of August, at 9.00 a.m. Being one of the leading plantation companies in Sri Lanka with a strong foundation in sustainable agriculture and operations, supported by renewable energy and numerous ethical trade partnerships, 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% of the Ordinary Voting Shares of Agarapatana Plantations Limited will be on offer to the Public today at an Issue Price of LKR 9.00 per share, with the Company seeking to raise a total of LKR 747,630,999/- 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 utilize LKR 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 LKR 75 million has been allotted for utilization 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 utilized elsewhere.

The company has clearly communicated with the investor community about the exceptional value proposition of this Issue, and has received a very positive response. Therefore, it is anticipated that the Issue will attract broad-based active interest, and result in a successful, oversubscribed issue. 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.”

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 maximize 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 1 MW.  Thus, overall, the issue presents investors with an exceptional high-value opportunity to expose their portfolios to the tea plantation sector, which is forecast to generate sustainable returns, and provide general insulation from exchange rate risks, over the medium to long term.

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