Textured Jersey Lanka launches Rs. 1.2 billion IPO
June 28, 2011 10:35 am
Colombo June 27th, 2011; Textured Jersey Lanka (Private) Limited (Textured Jersey or the Company), whose majority shareholders are Pacific Textured Jersey Holdings Limited, a fully owned subsidiary of Pacific Textiles Holdings Limited of Hong Kong (Pacific Textiles), and Sri Lanka’s Brandix Lanka Limited (Brandix Lanka), today launched its Initial Public Offering (IPO) to the value of Rs 1.2 billion.
Textured Jersey is currently majority owned by Pacific Textiles, which owns 45.6% of the company, with 34.3% being held by Brandix Lanka and the balance 20.1% being held by 47 other shareholders. Post-listing it is expected that 29.9% of Textured Jersey will be held with the public, with part of the dilution having already taken place via a pre-IPO placement in May 2011 and the balance through this IPO of new shares. The total transaction value is estimated to be approximately Rs 2.9 billion.
During the IPO the Company is issuing a 12.21% stake or 80,000,000 new shares at a price of Rs. 15/- per share, to raise funds for the expansion of production facilities and to purchase state-of-the-art machinery to increase its production scale and efficiency, in addition to continuing its policy of being an environmentally friendly manufacturing facility by investing in a water treatment plant
Both Pacific Textiles and Brandix Lanka completed a placement of a total of 116,000,000 shares, which amounts to 17.71% of the Company (post- IPO) to certain qualified investors before the IPO as a private sell down in May 2011. The consideration for the pre-IPO placement was Rs. 15/- per share, which is the same price as the IPO share price. Subsequent to the IPO, Pacific Textiles and Brandix Lanka will collectively hold 70.08% of the total issued shares of the Company.
Mr. Bill Lam, Chief Executive Officer of Pacific Textiles and a director of Textured Jersey, said that the listing would enable Textured Jersey to take advantage of potential inorganic growth opportunities in knit fabric in both Sri Lanka and the South Asian region in the medium term. “Volatility in cotton prices and regional currency appreciation are industry-wide headwinds, but we believe these challenges will facilitate industry consolidation in the longer term, and stronger players will continue to gain market share” he said.
Mr. Ashroff Omar, Chief Executive Officer of Brandix Lanka and a director of Textured Jersey, said that the listing was sought to provide Textured Jersey with a separate independent platform to raise funds from the capital markets to support its future growth aspirations. “Knit products are the fastest growing segment of the Sri Lankan apparel export market, which is growing strongly even after the end of the GSP+ concessions in August 2010, and Textured Jersey is the country’s pre-eminent producer of value-added knitted fabric” he added.
In order to further facilitate independent judgment in Board decisions, the Textured Jersey Board of Directors was recently strengthened by the addition of two highly respected independent directors, viz.Mr. Amitha Gooneratne, the MD of Commercial Bank of Ceylon PLC, and Prof. Malik Ranasinghe, the Vice-Chancellor of the University of Moratuwa.
The Hong Kong listed Pacific Textiles is a leading manufacturer of customized knitted fabric in the global textile industry, with a focus on complex, value-added fabrics. It has one of the largest textile manufacturing facilities in China, and provides integrated services of knitting, dyeing, printing and finishing.Despite cotton prices more than doubling, Pacific Textiles reported 22% YoY growth in revenue to HK$ 7,181 mn (USD921 mn) and 9% YoY growth in net profit to HK$ 876 mn (USD112 mn) during the year ended 31st March 2011. Pacific Textiles was invited to invest in Textured Jersey in 2004, and has been instrumental in transferring industry best practices and technical expertise, with full time seconded personnel being based at Textured Jersey and proactively involved in raising benchmarks of excellence.
Brandix Lanka has been accredited as Sri Lanka’s single largest apparel exporter. Having pioneered the concept of ‘total solutions’ in Sri Lanka’s apparel sector, Brandix is a preferred solutions provider to some of the world’s leading apparel brands, including Victoria’s Secret, PINK, Gap, Banana Republic, Marks & Spencer, Lands’ End, Tommy Hilfiger, Hanes, Express, H&M, Intimissimi and Tesco. The Brandix Group is supported by 32 manufacturing locations island-wide, in addition to other facilities in the South Asian region, and strategically located international sourcing offices. Brandix directly employs over 30,000 associates in Sri Lanka.
With the backing of these two strong shareholders, the listing would enable the Company to take advantage of potential growth opportunities in both Sri Lanka and the South Asian region, and also provide a separate independent platform to raise funds from capital markets to support its future growth aspirations. The Company remains confident in mitigating the challenge posed by the recent volatility in cotton prices, given its ability to pass on these industry generic costs, and with commodity prices also having recently declined.
Textured Jersey is one of Sri Lanka’s most sophisticated production facilities, manufacturing knitted fabrics for the intimate apparel and sportswear industries. Specialising in the manufacture of high quality, weft-knitted and dyed stretch fabrics, Textured Jersey is a major supplier to apparel manufacturers throughout Asia and end-chain retailers. Amongst its largest clients are Victoria’s Secret, Marks & Spencer and Intimissimi. Infrastructure at the 650,000 sq. ft facility in Avissawella enables a capacity to knit, dye and finish up to 2.5 million meters of fabric a month. Despite facing challenges in the form of rising cotton prices, high energy costs and loss of tariff concessions, Textured Jersey has delivered strong financial results during the past five years.
For the year ended 31st March 2011, the Company recorded a revenue of USD 83.2mn (Rs. 9,284.6mn) and a net profit after tax of USD 6.1mn (Rs. 684.7mn) which represented 15% and 23%YoY growth respectively. The Company has a strong financial track record, with five year revenue and net profit CAGRs of 25% and 21% respectively, during a period of multiple challenges for the apparel industry.
In order to both motivate and retain talent, as well as align employee interests with long term shareholder interests, Textured Jersey has offered an ESOP to the senior management personnel of the Company, amounting to 1% of the issued stated capital as at 26 March 2011. The ESOP will be in the form of options with an exercise price of Rs 15 per share, and the earliest exercise date forthe options will be 31 May 2013.Textured Jersey is being advised by investment bankers CT Capital (Pvt) Ltd and Acuity Partners (Private) Limited, who will also act as managers to the capital raising and listing exercise.
Textured Jersey is currently majority owned by Pacific Textiles, which owns 45.6% of the company, with 34.3% being held by Brandix Lanka and the balance 20.1% being held by 47 other shareholders. Post-listing it is expected that 29.9% of Textured Jersey will be held with the public, with part of the dilution having already taken place via a pre-IPO placement in May 2011 and the balance through this IPO of new shares. The total transaction value is estimated to be approximately Rs 2.9 billion.
During the IPO the Company is issuing a 12.21% stake or 80,000,000 new shares at a price of Rs. 15/- per share, to raise funds for the expansion of production facilities and to purchase state-of-the-art machinery to increase its production scale and efficiency, in addition to continuing its policy of being an environmentally friendly manufacturing facility by investing in a water treatment plant
Both Pacific Textiles and Brandix Lanka completed a placement of a total of 116,000,000 shares, which amounts to 17.71% of the Company (post- IPO) to certain qualified investors before the IPO as a private sell down in May 2011. The consideration for the pre-IPO placement was Rs. 15/- per share, which is the same price as the IPO share price. Subsequent to the IPO, Pacific Textiles and Brandix Lanka will collectively hold 70.08% of the total issued shares of the Company.
Mr. Bill Lam, Chief Executive Officer of Pacific Textiles and a director of Textured Jersey, said that the listing would enable Textured Jersey to take advantage of potential inorganic growth opportunities in knit fabric in both Sri Lanka and the South Asian region in the medium term. “Volatility in cotton prices and regional currency appreciation are industry-wide headwinds, but we believe these challenges will facilitate industry consolidation in the longer term, and stronger players will continue to gain market share” he said.
Mr. Ashroff Omar, Chief Executive Officer of Brandix Lanka and a director of Textured Jersey, said that the listing was sought to provide Textured Jersey with a separate independent platform to raise funds from the capital markets to support its future growth aspirations. “Knit products are the fastest growing segment of the Sri Lankan apparel export market, which is growing strongly even after the end of the GSP+ concessions in August 2010, and Textured Jersey is the country’s pre-eminent producer of value-added knitted fabric” he added.
In order to further facilitate independent judgment in Board decisions, the Textured Jersey Board of Directors was recently strengthened by the addition of two highly respected independent directors, viz.Mr. Amitha Gooneratne, the MD of Commercial Bank of Ceylon PLC, and Prof. Malik Ranasinghe, the Vice-Chancellor of the University of Moratuwa.
The Hong Kong listed Pacific Textiles is a leading manufacturer of customized knitted fabric in the global textile industry, with a focus on complex, value-added fabrics. It has one of the largest textile manufacturing facilities in China, and provides integrated services of knitting, dyeing, printing and finishing.Despite cotton prices more than doubling, Pacific Textiles reported 22% YoY growth in revenue to HK$ 7,181 mn (USD921 mn) and 9% YoY growth in net profit to HK$ 876 mn (USD112 mn) during the year ended 31st March 2011. Pacific Textiles was invited to invest in Textured Jersey in 2004, and has been instrumental in transferring industry best practices and technical expertise, with full time seconded personnel being based at Textured Jersey and proactively involved in raising benchmarks of excellence.
Brandix Lanka has been accredited as Sri Lanka’s single largest apparel exporter. Having pioneered the concept of ‘total solutions’ in Sri Lanka’s apparel sector, Brandix is a preferred solutions provider to some of the world’s leading apparel brands, including Victoria’s Secret, PINK, Gap, Banana Republic, Marks & Spencer, Lands’ End, Tommy Hilfiger, Hanes, Express, H&M, Intimissimi and Tesco. The Brandix Group is supported by 32 manufacturing locations island-wide, in addition to other facilities in the South Asian region, and strategically located international sourcing offices. Brandix directly employs over 30,000 associates in Sri Lanka.
With the backing of these two strong shareholders, the listing would enable the Company to take advantage of potential growth opportunities in both Sri Lanka and the South Asian region, and also provide a separate independent platform to raise funds from capital markets to support its future growth aspirations. The Company remains confident in mitigating the challenge posed by the recent volatility in cotton prices, given its ability to pass on these industry generic costs, and with commodity prices also having recently declined.
Textured Jersey is one of Sri Lanka’s most sophisticated production facilities, manufacturing knitted fabrics for the intimate apparel and sportswear industries. Specialising in the manufacture of high quality, weft-knitted and dyed stretch fabrics, Textured Jersey is a major supplier to apparel manufacturers throughout Asia and end-chain retailers. Amongst its largest clients are Victoria’s Secret, Marks & Spencer and Intimissimi. Infrastructure at the 650,000 sq. ft facility in Avissawella enables a capacity to knit, dye and finish up to 2.5 million meters of fabric a month. Despite facing challenges in the form of rising cotton prices, high energy costs and loss of tariff concessions, Textured Jersey has delivered strong financial results during the past five years.
For the year ended 31st March 2011, the Company recorded a revenue of USD 83.2mn (Rs. 9,284.6mn) and a net profit after tax of USD 6.1mn (Rs. 684.7mn) which represented 15% and 23%YoY growth respectively. The Company has a strong financial track record, with five year revenue and net profit CAGRs of 25% and 21% respectively, during a period of multiple challenges for the apparel industry.
In order to both motivate and retain talent, as well as align employee interests with long term shareholder interests, Textured Jersey has offered an ESOP to the senior management personnel of the Company, amounting to 1% of the issued stated capital as at 26 March 2011. The ESOP will be in the form of options with an exercise price of Rs 15 per share, and the earliest exercise date forthe options will be 31 May 2013.Textured Jersey is being advised by investment bankers CT Capital (Pvt) Ltd and Acuity Partners (Private) Limited, who will also act as managers to the capital raising and listing exercise.
