Nearly two and a half years into setting up of a stock broking arm in Sri Lanka, India’s diversified financial services group, India Infoline Limited (IIFL) is to sell its entire stake to exit the Lankan operations, according to a top company executive.
IIFL Securities Ceylon (Pvt) Limited Sri Lankan Country Head and CEO Priyani Ratna-Gopal said she would purchase the 76 percent stake held by IIFL but did not want to disclose the price.
“They (IIFL) are planning to divest their stake but we are still seeking some regulatory approvals from the Securities and Exchange Commission,” said Ratna-Gopal.
IIFL Securities Ceylon (Pvt) Limited was set up in July 2010 as a 76 percent subsidiary of IIFL, becoming the first foreign broker to receive the Colombo Stock Broker provisional membership approval while the balance was held by Ratna-Gopal.
However she stressed the deal is purely a ‘change in equity’ in nature but there would not be any change in the company’s operations and she would continue to receive the support of IIFL in carrying out operations.
Since inception IIFL Securities Ceylon (Pvt) Limited enjoyed its Indian parent’s strengths in technology, particularly the proprietary internet trading platform, and its acclaimed research capabilities to effectively cater to domestic and foreign institutional investors in Sri Lanka.
However Ratna-Gopal said she would seek a name change to the entity as IIFL will cease to be an owner.
Apart from Sri Lanka, Mumbai-headquartered IIFL has operations in USA, UK and Singapore. The Group’s equities and commodities business recently came under pressure particularly due to low volumes.
Sri Lanka’s overcrowded stock broking industry with 29 players was also struggling to remain solvent due to low activity in the Colombo bourse with few exceptions.
According to analysts IIFL’s Sri Lankan exit could have been due to inadequate returns with which IIFL cannot justify their presence in Sri Lanka.
Apart from stock broking facilities, IIFL Securities Ceylon (Pvt) Limited also provided investment banking services.