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Sri Lanka stock exchange woos IT firms with revised requirements

ECONOMYNEXT – Sri Lanka’s stock exchange has offered options for information technology firms with a track record to list, including via a second tier board with entry requirements which accommodates valuations of tech firms.

Colombo Stock Exchange Chief Executive Rajeeva Bandaranaike said listing requirements were changed to cater to the models seen in tech sector.

“Companies that ideally could not look at a listing on the main board as a result of the three consecutive year profit requirement now have other options,” Chief Regulatory Officer of CSE Renuke Wijayawardhane was quoted as saying at a forum with an IT industry body.

“Companies with positive net assets for two financial years could list on the CSE with an aggregate net profit after tax for three years, an alternate which does not require companies to be profitable for three consecutive years.

“To broaden the entry routes, we have also introduced revenue and cashflow options in addition to the two profit-based routes. ”

Companies that could show an aggregate revenue of 3 billion rupees for three financial years or positive operating cashflow after adjusting for working capital for two consecutive years could apply to list.

Companies that have revenues of 5 billion rupees at the point of listing could also use the route.

Companies could see a listing on the Diri Savi Board if they had a revenue of 350 million rupees for the financial year immediately preceding the date of application and a market capitalization of two billion rupees at the point of listing.

“When it comes to Financing there are many options companies can evaluate from bootstrapping, Angel investors, debt capital, Venture Capital to private equity,” Chairman of the Federation of Information Technology Industry Sri Lanka (FITIS), Abbas Kamrudeen said.

“But my belief is that for those companies that have matured to some extent, there is no better option to financing than going public.

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“The reason being, it not only gives you flexibility and speed in future rounds of financing, but it will allow you to understand the true value of your organization.”