CSE demutualisation awaits govt. policy on share split

• SEC hints at strategic investor role as 30 IPOs line up
• Plans road shows in Middle-East, Europe and Japan next year

By Nishel Fernando

Professor Hareendra Dissabandara

The demutualisation of the Colombo Stock Exchange (CSE) is awaiting a final policy decision from the new government regarding its share allocation, according to Securities and Exchange Commission (SEC) Chairman Senior Professor Hareendra Dissabandara.

Prof. Dissabandara revealed that beyond the original ownership structure, a role for a “strategic investor” is now being considered. This move comes as the SEC prepares to capitalise on a surge in foreign investor interest and a robust pipeline of “around 30” new Initial Public Offerings (IPOs) heading to the market.

“Demutualisation of the CSE” is the first of twelve key projects in the SEC’s plan to transform Sri Lanka’s capital market landscape. The project’s objective is to convert the CSE from an entity owned by its members into a “shareholder-owned corporate entity” to improve governance, efficiency, and access to capital.

Prof. Dissabandara noted that while CSE member firms had previously agreed on a 60/40 share split—with 60 percent of shares allocated to the member firms (primarily stockbrokers) and 40 percent to a Capital Market Development Fund (CMDF) for public interest—the final “rate” is pending a policy decision.

“This is a new government. So, we have to think about that,” he said. “Once it is finalised, most of other things are not a big thing.”

Significantly, the Chairman added a new dimension to the plan: “Sometimes we need to have strategic investors. So, for that also now we have some opening.”

This potential inclusion of a strategic partner aligns with the SEC’s formal objectives for the demutualization project, which list “Enabling of strategic investments” as one of its expected outcomes.

Fueling the market’s transformation is a strong pipeline of companies seeking to go public. 

“In the pipeline, we have about around 30 and I hope the real number will be more than that,” Prof. Dissabandara stated.

He noted these are primarily equity IPOs. This development supports SEC’s “Project 6: New Listings (Public & Private),” which aims to encourage both private companies and State-Owned Enterprises (SOEs) to use the capital market for funding.

The Chairman acknowledged that the “cost factor” of listing can be a deterrent and said he plans to “have a chat with the investment managers” to explore reducing costs as business volume increases.

The push for new listings is backed by tangible success in attracting foreign capital, a key goal of the SEC’s “Project 7: Attracting New Funds (Local & Foreign)” , which aims to correct the market’s current status of “Low foreign inflows”.

Prof. Dissabandara hailed the recent “Invest Sri Lanka” Investor Forum in Singapore, held on August 12, 2025, as a major success.

“Before we came back to Sri Lanka, [there was a] Rs.700 million investment to Pickme. And nearly Rs.4 billion commitment to Sarvodaya Finance. Likewise it’s a huge response,” he said.

He contrasted this with past efforts, noting, “In the history we... could not at least cover the airline... ticket cost. We are very happy, so we are very confident.”

Building on this momentum, the SEC is planning an aggressive international road show schedule for 2026. 

“Next year, we will be going to Dubai, that means the Middle East area, then Europe, and we will be going to Japan as well,” Prof. Dissabandara confirmed.

To prepare for the Japan visit, the SEC will first conduct an online, “half a day session for Japanese investors” by the end of this year to create awareness.