Adam Investments in lacklustre entry

The lacklustre approach to the Initial Public Offering ( IPO) by Adam Investments from the market was indicative of the lack of interest by the public, analysts observed. The company started trading on Tuesday with its offer getting oversubscribed as stated in a stock exchange filing.

The Adam Investments Public Offer for subscription of 133,333,500 ordinary voting shares at Rs. 3 per share was announced as oversubscribed on May 30.

On June 5 the company issued a statement to the Colombo Stock Exchange noting that it had a full subscription on its IPO of Rs. 400 million based on 316 applications. Subsequent to the banking of cheques, based on the final reconciliation, the total subscription received was Rs. 397.9 million from the 299 applications.

In this regard the company was listed as a Diversified Holdings on the Diri Savi Board of the Colombo Stock Exchange with 449,276,200 of its shares being listed.

The market was seen to question the Adam Investments, which even in its fourth day since opening on May 19 had raised only Rs. 110 million of the targeted Rs. 400 million, which market analysts observe was indicative of the lack of interest by the public.

It was pointed out that the company does not have much of a track record since it has only investments in other companies in addition to only a string of minority stakes with 39.6 per cent in Orient Garments and 10.12 per cent in PC House.

The former, Adam Investments hopes to turn around and enjoy a majority stake of 51 per cent by the end of the year. It has 43 per cent in Network Communications, 47 per cent in Adam Metals, 21 per cent in Adam Apparels, 8.09 per cent in Ceylon and Foreign Trades PLC and full ownership of Adam Automobiles and Adam Air Conditioners.

However, the company itself had seen a sharp dip in its profits for the year ending December 31, 2013 as profit before tax was recorded at Rs. 32.4 million down from the previous year’s Rs. 91.4 million. Group profits before tax had also gone down significantly from Rs. 98.3 million in 2012 to Rs.38.8 million in 2013.

Other analysts point out that even in the first three months of this year there were similar IPOs that had a very low interest from the public and that this was not the first to have a lack lustre entry.

The former, Adam Investments hopes to turn around and enjoy a majority stake of 51 per cent by the end of the year.It has 43 per cent in Network Communications, 47 per cent in Adam Metals, 21 per cent in Adam Apparels, 8.09 per cent in Ceylon and Foreign Trades PLC and full ownership of Adam Automobiles and Adam Air Conditioners