CAL launches Rs.1.58bn IPO eyeing frontier market expansions

 PIX BY KITHSIRI DE MEL

• Offers 7.6% stake, at Rs.10 per share 
• Nearly half of IPO proceeds to be utilised to fund Kenya expansion
• Eyes two other frontiers with a minimum of US $ 100bn GDP

By Nishel Fernando 

Capital Alliance Holdings Limited (CALH), a leading fully-fledged investment bank in Sri Lanka, announced a Rs.1.58 billion initial public offering (IPO), in line with its plans to expand its wings into Kenya and other frontier markets. 

The company’s IPO will list 7.6 percent of its stake, equivalent to 157.5 million shares, on the Main Board of the Colombo Stock Exchange (CSE). The shares will be offered at Rs.10 each, representing a 21 percent discount compared to the company’s September valuation of Rs.24 billion. Following the IPO, the company’s market capitalisation is projected to reach Rs.20.7 billion.

The IPO is set to open on May 8, 2025, marking the first IPO on the CSE in the year.

Nearly half of the IPO proceeds will be utilised to fund the CALH expansion into Kenya, which is targeted to materialise within a one-year period.

“We are looking to enter Kenya, using Nairobi as a gateway to East Africa, because it serves as a regional financial centre. When we set up in Kenya, we will be covering 250 million people and a cumulative GDP of about US $ 650 billion.

We are also looking at two other frontier economies that fit the criteria that we’re looking for, with which we can take this to a trillion-dollar total GDP and service close to 500 million people. That’s the growth story: taking 10x from Sri Lanka’s GDP and servicing 20x our population,” CALH CEO Kanishke Mannakkara told reporters in Colombo on Thursday.  East Africa is projected to be one of the fastest-growing regions globally, with an estimated annual growth rate of 5-6 percent over the next decade. 

CALH is currently focused on acquiring an existing fully licenced capital market service provider in Kenya that holds an investment banking licence, stockbroking licence and primary dealing licence, according to the prospectus. If a fully-fledged capital market service provider is not available, CALH will consider acquiring companies engaged in one or more of these services and subsequently pursue the other necessary licences. 

The estimated timeline for completion, including the regulatory approvals, is approximately four to five months. If a suitable acquisition cannot be identified or successfully completed in this estimated timeline, CALH will consider setting up a new entity. Commenting on the other potential expansions into frontier markets, Mannakkara shared that CALH would target countries with a GDP of at least US $ 100 billion dollars a year (ideally US $ 200 to US $ 300 billion plus), where English is spoken, the legal system is familiar and travel is relatively convenient.

The remaining funds will be utilised to enhance the digital investment platform and expand the retail investment reach through cost-effective, tech-driven onboarding.

“Our growth strategy focuses on three pillars. First, we’ll expand into other frontier markets. Second, we’ll use technology to provide investment banking solutions to retail investors. Finally, we’ll use our balance sheet to create innovative products and unlock value in the capital markets,” Mannakkara explained.

Meanwhile, he elaborated CALH’s vision behind the proposed expansion plans, emphasising its deep belief in capital markets and the ability to unlock wealth and prosperity across societies.

“Capital exists within the economy and wealth is created by deploying that capital where it’s needed. Capital markets, like highways or pipes, move this capital from where it exists to where it’s needed. Our purpose is to help grow these capital markets in the economies where we operate. We’ve chosen to operate in a set of frontier economies because the need is greatest there.

Our primary focus is on what are typically referred to as ‘poor countries’, those with less developed capital markets infrastructure. This is where we see the greatest need and it’s also the area we know best. 

Having grown up in Sri Lanka, we understand this market environment and believe we excel at generating superior returns,” he said. 

CALH was founded by veteran capital market strategist Ajit Fernando, after obtaining a licence to operate as a primary dealer and trading in securities. The company reached several key milestones during the past six years, according to CALH Chairman Dinesh Ajith De Zoysa.

Mannakkara emphasised that integrity was a key driver of the company from the outset.

“This means never selling to a client what you wouldn’t sell to your own family. Dynamism or innovation is another core value, constantly challenging the status quo and driving the innovation we see daily in capital markets product creation. Fairness is also key,” he added.

CALH is the largest non-bank primary dealer. It’s also the second largest stockbroker and the second largest asset manager. Further, CALH is the fastest growing investment bank in Bangladesh. With over 40,000 customers and US $ 800 million assets under management, CALH is the largest investment bank in Sri Lanka, across all four sectors in which it operates.