National Investment Fund extends fiscal aid for SOE restructuring

The listing of the National Investment Fund (NIF) on the Colombo and London Stock Exchanges is to help the Government raise US$ 400-500 million, foreign expert economist said.

Furthermore, at any point in time there is a need for additional funding, the Government will have the option of monetization of stakes held in the NIF and/or the underlying portfolio companies at valuations that should be higher over time as a result of the efforts to increase efficiency and profitability.

This was stated by Franklin Templeton Deputy CEO of Corporate Strategy Marius Dan adding that listing was a good way of raising short-term funds without losing any control.

He said: “It could help Sri Lanka from doing any fire sales now. It would help the Government with any short-term funding gaps.”

“Such transactions, through Accelerated Book building Offerings, generally take 48-72 hours to execute,” he further observed.

The creation of the NIF, its IPO, and the promotion of the country will allow large foreign institutional investors to access and invest in Sri Lanka, and will help raise the country’s profile around the world.

Additionally the fund managers can look at the best ways to integrate Franklin Templeton Deputy CEO of Corporate Strategy Marius Dan noted that listing was a good way of raising short-term funds without losing any control.

He said: “It could help Sri Lanka from doing any fire sales now. It would help the Government with any short-term funding gaps.”

“ESG has become a global theme and fund flows have increased significantly into companies who show a commitment to improving their operating model.”

Several experts recently at a webinar identified listing as a better step to raise capital for SOEs. Franklin Templeton Deputy CEO of Corporate Strategy Marius Dan noted that listing was a good way of raising short-term funds without losing any control.

He said: “It could help Sri Lanka from doing any fire sales now. It would help the Government with any short-term funding gaps.”

This new National Investment Fund will help the government to restructure ailing State owned Enterprises (SOEs).

The total loss of the key 52 SOEs was Rs.726.9 billion for the first eight months of 2022of which 31 SOEs recorded a profit beforetax of Rs. 134.9 billion and the balance, 21SOEs reported a net loss of Rs. 861.7 billion.

Notably, 99 percent of the total loss has been generated by three SOEs namely, CPC, CEB, and Sri Lankan Airlines (SLA) totaling a cumulative loss of Rs. 854.5 billion from these entities.

These three entities have been loss making for years which has resulted from debt overhang warranting cost reflective.