Melstacorp PLC has 9.8% stake of JKH as 31^st March 2019, being the 3^rd largest shareholder

Sri Lanka’s one of the oldest-richest men and a Billionaire turned Liquor and Dairy Baron Harry Jayawardena, has increased his shareholding in Colombo Stock Exchange’s (CSE) leading listed Blue Chip in Sri Lanka - John Keells Holdings (JKH) to nearly 9.8% in a 03 months period, latest financials note.

The latest JKH financials outline as at 31^st March 2019, Billionaire Harry Jayawardena’s Melstacorp PLC owned 9.8% stake or 128.5 million ordinary voting shares of JKH compared to 8.4% stake or 116.7 million shares of JKH exactly a three months ago. Accordingly Melstacorp PLC has increased JKH stake by 11.8 million voting shares in 03 months further strengthening the company’s third largest shareholder position followed by Sohli Captain and related parties and second largest being Malaysia’s state investment arm Khazanah Nasional’s special investment purpose vehicle Broga Hill Investment Ltd.

The John Keells Holdings (JKH) group is Sri Lanka’s foremost conglomerate that sells Keells Sausages to Elephant House Sausages to Elephant House Drinks; Premier Cinnamon City and Suburb Hotel Rooms to Expensive City Condominiums in the country apart from controlling a larger share of Port Operations, Tea and Rubber Broking to several other industries.

Latest financials also shows that the JKH group’s nearly 20.2% stake is under ownership of Billionaire Sohli Captain (11.6% stake) and Rusi Captain (2%) along with their company Paints and General Industries (6.6%) that also control one of Sri Lanka’s oldest and leading agricultural and fertilizer business conglomerate CIC Holdings.

The second largest shareholder of JKH is Malaysia’s state investment arm Khazanah Nasional’s special investment purpose vehicle Broga Hill Investment Ltd has also increased stake by nearly 0.6% in a 3 months. (Current stake 10.8% compared to 10.2% in December 2018) that bought an 8.9% stake in Sri Lankan conglomerate John Keells Holdings (JKH) for nearly US $ 120 million in Mid-March 2012.

Financials also notes that JKH recently concluded on 11 November 2018 to repurchase up to a maximum of 69,376,433 of its Ordinary Shares, amounting to 5% of the total number of issued shares of the Company at Rs. 160 per share. The Company received acceptance of 32,189,118 Ordinary Shares (which amounts to acceptance of 46% of the offer) and 37,187,315 shares were allocated for repurchase based on the additional applications. Accordingly a total amounting to Rs. 11.10 billion has been paid out on 25 January 2019. The buyback planned to execute a share buyback to the tune of Rs.11.1 billion, offering to repurchase one out of every 20 ordinary voting shares in issue from then existing shareholders.

As at 31st March 2019 JKH had 1,318,173,279 (over 1.31 billion) voting shares in issue whilst  10,914,400 (Over 10 million) of them are owned by current Chairman Krishan Balendra and 20,006,476 (Over 20 million) of them are owned by his father and first Sri Lankan Chairman of JKH Kandiah Balendran, making the once former Chairmen and Present Chairman Billionaires in the country.

Market analysts further points out that if Billionaire Harry Jayawardena or his Melstacorp representatives further takes up JKH shares they could get a Board Seat or two of John Keells Holdings (JKH) and will indirectly give opportunity to Harry Jayawardena and his family to control JKH associate and subsidiary banks and insurance companies such as Nations Trust Bank and Union Assurance. Harry Jayawardena already controls country’s largest privately owned three licensed commercial banks in Sri Lanka including HNB, DFCC and Commercial Bank apart from the finance and insurance companies owned by those banks apart from Harry Jayawardena owned Continental Insurance. Some economic experts and analysts outline that many entrepreneurs and common people lose access for credit opportunities or unable to seek potential credit for enterprise growth once a ‘Mega Oligarch’ take the control of several banks in the country which will provide ample of huge opportunities for such an Oligarch to take over other ailing businesses or running enterprises in an economy which has only 21 million populace, whilst such an economy is controlled by mostly un-educated politicians that take unwise policy decisions falling to the hands of the Oligarchs business agenda. Earlier Sri Lanka’s financial regulators had written legislation that has prevented local banks from falling into the hands of a controlling shareholders such Harry Jayawardena, however he still continue hold a larger percentage of HNB, DFCC and Commercial Bank whilst it has also paved some Harry J favoured professionals (who are also relatively attached to country’s top politicians) to serve the top seat in top two privately owned banks in the country including HNB and Commercial making history in Sri Lanka.

Analysts say if Melstacorp takes over control of JKH, Harry J may virtually control 4 largest Licensed Commercial Banks, several Finance and Insurance Companies apart from being a Liquor and Dairy Baron that controls Colonial era founded 2 largest Conglomerates in Sri Lanka named CIC and John Keells Holdings.

- Reporting by Devendra Francis