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No shares allotted illegally: Kapruka

22 Dec 2021

  • Preferential allocation was within the rules: Dulith Herath
  • I doubt Kapruka has breached any rules: Dumith Fernando
    BY Shenal Fernando Recent allegations circulating on social media that Kapruka has entered into an illegal agreement with two High Net Worth Investors (HNWIs) to allocate the full equity applied by them in violation of the terms of its prospectus and the Colombo Stock Exchange (CSE) Listing Rules, in return for them promoting the Kapruka initial public offering (IPO), were denied by Kapruka Holdings Founder and Chief Executive Officer (CEO) Dulith Herath.  Speaking to The Morning Business yesterday (22), Herath denied the veracity of these allegations, claiming: “Any preferential allocation made is well within the rules and actually one of our directors itself, Priyanthi Pieris, is one of the most well-respected lawyers in the country, so nothing like what has been alleged has been done and this is purely just a rumour.” According to the prospectus published by Kapruka, 50% of the 32.8 million shares offered in the IPO will be allotted to the non-retail investor category, of which 50% (8.2 million shares) will be allocated to strategic investors on a preferential basis. Therefore, such preferential allotment to strategic investors would represent 25.0% of the total shares on offer through the IPO.  Speaking to us, CSE Chairman Dumith Fernando stated that while he is unaware of the exact specifics of the allegations made, he doubts that Kapruka has breached any rules. Explaining further, he stated: “There is a set amount which has to be allocated to retail investors and unit trusts. Other than that, a company is allowed to allocate as they wish, provided a disclosure is made in the prospectus setting out how much they can allocate at their discretion. If shares are allocated to any people in that regard, I don’t think that there is any violation of the CSE Listing Rules.”  He further stated that preferential allocations are usually done by the issuer in the best interests of the issue. Owing to most retail investors trading the shares acquired through the IPO after it enters the market, allocation to a person who will hold the shares long term is crucial to ensure price stability, which is why a portion of the issue is earmarked for preferential allocation at the discretion of the company or managers of the issue. “As long as they are within the disclosed parameters in the prospectus, they would not be in violation of the CSE Listing Rules,” noted Fernando.  The Kapruka Holdings IPO offered 32.8 million ordinary voting shares, representing a 20% stake at a price of Rs. 15.4 per share in order to raise Rs. 500 million. The issue, which is managed by Acuity Partners, opened yesterday and within the early hours of the day itself, it was announced that the issue was oversubscribed, having received applications for over Rs. 825 million for the offered 32.8 million shares. Accordingly, the subscription list was closed at 4.30 p.m. as per the prospectus.  Founded in 2002, Kapruka is Sri Lanka’s first and largest locally owned e-commerce enterprise. The company, through its website, facilitates online purchases of goods for its Sri Lankan and expatriate customers. Around 57% of its sales are foreign sales, which is supported by the fact that the company caters to over 1.1 million expatriate Sri Lankans. The average customer base of the company has grown by over 61% over the past five years and its current customer base is around 2.7 million, of which expats amount to around 40%. The average basket volume of expats is around $ 50 and around Rs. 5,000 in the case of locals. 

Kapruka

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!


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