Hikkaduwa Beach scraps plans to use IPO proceeds for water sports

Half of the funds raised through the initial public offering (IPO) of Hikkaduwa Beach Resort PLC, amounting to Rs.57.6 million, which were to be utilized for investments in water sports, would be redirected for construction and refurbishment due to u n a t t r a c t i v e r e t u r n s o n investments, the inte r im results said. The funds were originally to be used to conduct water sports outside the hotel. Prior to the investment, Citrus Hikkaduwa had opened a desk to promote water sports, in conjunction with third party operators.

“However, after a trial period, it was observed that the revenue generated by water sports did not justify a return on the investment. In that light, the company decided to provide the option of ocean-based water sports/facilities with third party operators instead of making the aforesaid investment,” it said. The funds will instead be used to enhance the stay of guests and raise the average room rate of the hotel. The company proposes to improve the swimming pool and attendant areas, upgrade ground floor rooms to provide special services to surfers and start construction on an aqua accessories and amenities shop, which will be leased to a third party, an aqua themed beach bar and a water theme park for children. Improvements to the pool had commenced in April and the hotel was closed for the duration and reopened earlier this month. Other construction and renovation projects are underway and the theme park will start construction in November 2016.