The new government has said that it will dispose its stake in non strategic assets. The Lanka Hospital Corporation PLC (LHCL) is the listed entity that comes into the picture after this report.
The state, through it’s insurance arm, Sri Lanka Insurance Corporation holds a controlling stake of 54.6% in LHCL. In addition, Property Development PLC (PDL), another listed entity of which 95% is held by state owned Bank of Ceylon holds 9.5%. Fortis Global Healthcare is the other prominent shareholder with close to 30% stake.
Hemas Holdings PLC (HHL), which is also in the business of healthcare was the first to express interest in this stake that is possibly up for grabs. Later Asiri Hospital Holdings (ASIR), a subsidiary of Softlogic Holdings PLC (SHL) also showed interest. ASIR has been a cash generator for SHL and this would be a further consolidation of its healthcare portfolio for ASIR.
A noteworthy observation is that LHCL has over Rs. 1.5b cash and cash equivalents in its latest balance sheet, which is more than 25% of its total assets.
On assets basis, LHCL has 22.36/- net assets per share while it last traded at 62.50/- on 8th December 2015.
Investor Corner will do a further analysis in this regard, but the question remains, should the government sell the stake and realize the gain – will the benefit go to the government in its entirety, or should it continue with the stake and reap the dividends?
