Laugfs Gas Ltd. (LGL), one of the two downstream LP Gas operators in Sri Lanka, announced its intention to raise Rs. 2,505 million from the public through an Initial Public Offering (IPO) of 22% of its stake.
Listing on the Dirisavi Board of the CSE, the company is offering 75 million voting shares of the company at the share offer price of Rs. 23 each and 52 million non-voting shares of the company at the share offer price of Rs. 15 each. The Official opening of the IPO will be on the 4th of November and will be kept open until 25th of November unless fully subscribed before that. The minimum subscription has been set at 100 shares and thereon in multiples of 100 shares of any class of shares applied.
The company, which began its business in a humble way in 2001 by entering into the LPG gas downstream industry - which was till then dominated by a multinational company - will use the proceeds of the IPO to finance the expansion of its core business in LPG downstream activities – mainly for increasing the storage and filling capacity, expansion of its distribution network and also for the introduction of a new range of LP Gas related products to the market. The business activities of Laugfs Group carried out under some of the subsidiaries - namely the island wide network to test the vehicular emission levels, hotel management and serviced apartment complex etc. will now come under the wings of LGL and part of the proceeds of the IPO will be applied for further expansion of these activities. Under the leisure sector, plans are already underway to construct and manage a new 100 roomed hotel in Chilaw and also to build 72 serviced apartments at a company-owned prime property in Maya Avenue, Colombo 06, on which construction has already commenced. The balance funds collected from the proceeds of the IPO will be applied to retire the high cost borrowings of the company.
Chairman of Laugfs Group W.K.H. Wegapitiya announced at the launch that the decision to list the company on the CSE was taken to achieve two main objectives; “The first being to expand the LPG downstream operations and to take LGL’s other diversified businesses it to greater heights in the current positive and conducive environment, whilst the second being to get rid of the high cost borrowings which has been a strain on the company’s cash flow and bottom line.”
He said that the demand for LPG in the country was now rising and by raising Rs. 2.5 billion through this public listing, the company would be in a position to drive into the next level of operation, such as setting up its own storage facility and expansion of market share and logistics.
“We also hope to use this money for our future strategic investment plans, such as the leisure industry, where we have already been managing two hotels down south, Emerald Bay and Temple Tree and we are also currently building a four-star plus resort in Chilaw with 100 rooms at an investment of Rs. 500 million,” he added. According to LAUGFS, the company currently has introduced 500,000 domestic 12.5 kg cylinders to the market. “At present we enjoy a 27% market share in the domestic LPG market and 60% in the industrial LPG gas sector and 80% in the auto gas category. Altogether we hold a 40% market share in the entire LPG sector in the country,” he said.
With diversification into 15 different sectors, Laugfs has been smiling with growth for the last 10 years, and subsequent to this IPO, it will have a flagship brand of its own in the leisure sector – which would initially encompass a four star hotel and later expand as a chain of its own. In the LPG sector, LGL will look forward to being a regional player in the future amidst ongoing discussions with certain reputed overseas entities involved in the global LPG business. What’s more, with a strong distribution network, reputed brand name and extensive presence in the North and East regions, the Company believes that it is poised to benefit from a double digit growth in the industrial market.
“This is a very exciting year for Laugfs as we continue to get closer to our growing number of customers in Sri Lanka and we believe that the IPO is a unique opportunity for our customers and the wider investor community to get even closer to Laughs,” stated the Chairman in conclusion. “We’re delighted at the level of interest and excitement that the IPO is generating here in Sri Lanka, and we are looking forward to welcoming new investors, retail and institutional alike, to the Laugfs family.”
Photo caption: Chairman of Laugfs Group W.K.H. Wegapitiya and (below) a cultural item during the ceremony.
