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Sri Lanka’s Anilana raises equity for new hotels
Sri Lanka’s Anilana raises equity for new hotels Billion rupee private equity raising offered a 40-pct stake in the new luxury hotel firm
Shamindra Kulamannage
LBR,Monday 16 May 2011

Sri Lanka’s Anilana Hotels and Properties, controlled by stockbroker Asanga Seneviratne, has raised a billion rupees offering a 40 percent stake to new investors to build a number of luxury hotels on the islands East coast.

Asanga Seneviratne, formerly head of Asia Capital who now part owns and heads TKS Securities and associated companies including a finance company, controls 60 percent of Anilana following the private placement of shares concluded in February 2011 to which over 50 individuals and corporations subscribed.

“I have the best properties and I don’t know of anybody else who has invested in that area,” claims Seneviratne about the five East coast beach properties and one in north central Sri Lanka which he owns or has leasehold right to.

Anilana Hotels will invest Rs1.4 billion constructing its first two hotels which will accept guests next year. The first, built on a six acre property on lease from the government for 50 years, is the first block on the famous Pasikuda bay, where other upmarket chains are also planning hotels.

The five acre property at Nilaveli where the former ‘Nightjar’ hotel stood, already a popular tourist beach because of the shallow beach, jewel-blue water and a natural coral reef created pool, is where the second 70 room hotel will be constructed.

“These areas are virgin territory and offer some of the finest beaches in the world,” he claims. Mano Ponniah Associates, a leading architectural partnership which has won awards for hotels it conceived in the Maldives like Adaaran Prestige Water Villas, are the designers for the project.

Together with ‘related investors’ Seneviratne had purchased 80 acres of the best beachfront land over the last eight years. He transferred ownership of this real-estate to Anilana, a firm he owned and which used to manage five boutique hotels, for his controlling stake.

Following the private placement Anilana is valued at Rs2.5 billion. Seneviratne forecasts that value to quadruple in a couple of years when he plans to take the firm public.

The property at Pannichankerni, to be developed in Anilana’s second phase, is located on a spectacular six acre beach head surrounded by a green algae filled soft sandy shoreline near a fishing village and bordering the Trincomalee Natural Reserve while in Pasikuda its hotel will be surrounded by calm blue water and a coral meadow thriving with bird-life.

“I believed the war was going to end at some stage and actually hoped it would finish sooner than it did,” he said during an interview with LBR magazine at Anilana’s office at Colombo’s Reid Avenue.

“We plan to keep acquiring land. We have earmarked a couple of big blocks for purchase.” In an offer document for the private placement the firm disclosed its intention to bid for land on the North Western coast under the government’s Kalpitiya Tourism Development Initiative and further claims it has ‘identified additional property on the Eastern Province for acquisition’.

Foundations have already been laid for the first two hotels to be financed by the cash raised in the private placement. Private villas which are being presold at between Rs35 to 55 million each to finance construction are also part of the first phase.

The response to the sale of 50 villas has been encouraging. “When you offer a new product, in a country people haven’t visited or an area they haven’t visited I believe there is going to be an influx,” Seneviratne says confidently. He is also counting on the over one million Sri Lankans living abroad, “60 to 70% of them haven’t even visited Sri Lanka for the last 5 or 10 years,” he says.

Hotel earnings are forecast at Rs717 million in the first year of full operations in 2013 by Seneviratne’s TKS Securities which will handle the private placement when all six hotels are operating. If forecasts are accurate the two year forward PER for investors in the private placement would be 3.4 times, a lot more attractive than the market’s two year forward PER of 12 to 23 forecast by analysts.

Four of the hotels in Trincomalee, Vakarai, Pannichankerni and Dambulla will be built during the firm’s second phase of expansion which will also include more private villas. “The model is within three hours of road travel to have six resorts,” he contends. TKS Securities is forecasting the firm will need, in addition to the billion in new equity which has already been raised, Rs1.8 billion in debt and Rs2.5 billion in villa sales proceeds to complete all six hotels and villas.

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Sameera Udesh
2011-11-19 7:12 PM

This is an excellent decision taken as the war ends
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