ECONOMYNEXT- Singapore-based G&G Group is looking to invest in Sri Lanka’s agriculture sector in the future, an official said after acquiring tea producer Hatton Plantation Plc (HPL) for 1 billion rupees despite heightened risk perceptions.
"We will use HPL as a platform through which we will consolidate in Sri Lanka’s agriculture sector with further opportunities," said Gowri Shankar, a Director of G&G subsidiary Lotus Renewable Energy Pty Ltd.
"We’re looking at not only tea, but other agriculture processes," he said.
The group is investing despite risk perceptions being heightened following Islamist suicide bombings in April.
"We’re passionate and want to support Sri Lanka during its time of need," Shankar said.
G&G, which invests in environmentally sustainable agriculture and energy, will be looking to invest in businesses that cater to both local and export markets in Sri Lanka, Shankar said.
"It is a combination of both, but we will be leaning more towards exports," he said.
HPL’s former owner Sunshine group, separated the tea operations from the rest of its businesses due to volatility of the commodity. Under Sunshine management, the tea firm was among the most profitable.
However, G&G is confident of the tea industry’s prospects in the long run.
"If we were too concerned about the volatility, we would not have invested," Shankar said.
"The investment falls in line with the long-term vision of our group."
G&G’s local subsidiary Lotus Renewable Energy Pvt Ltd will also be looking for more investments in hydro and LNG power generation, he said.
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The firm paid a premium to market price for 51 percent. It has an option to buy more stock at the same price.
The stock fell from 6.90 rupees to 6.40 after the blasts. The new buyers paid 8.30 rupees for control. The stock closed trading at 7.90 rupees, up 1.80 rupees.
Net assets per share of HPL was 8.25 rupees in December.
The 1 billion rupee acquisition was financed partly through cash as well as debt, through NDB Bank.
Lotus Renewable Energy has been expanding its energy business with acquisitions including Browns Hydro Power and Zyrex Power over the past three years.
The G&G group has a turnover of 400 million US dollars and employs 20,000 people, according to its website. It farms on 50,000 hectares of land in Australia. Most of its operations are in grains, pulses and oilseeds.
The HPL acquisition will add 5,000 hectares and approximately 12.8 million US dollars in revenue to G&G.
It also has interests in companies such as Prima Group subsidiary Ceylon Agro Industries and Origin Teas, which owns 16 plantations in Sri Lanka .
Group Chairman Gary Seaton had held a 45 percent stake in Pussellawa Plantations in the past, before divesting in 2018. (Colombo/May28/2019)