Myland Developments Limited is looking to raise Rs 75 million by way of a rights issue on the Diri Savi Board of the Colombo Stock Exchange. The funds raised are to be utilised to reduce the firm’s dependence on bank borrowing. The listing also seeks to raise the profile of the business and take advantage of the tax benefits firms gain by listing before the end of this calendar year.
The company has shown rapid growth after being established in 2017 and was able to post revenue of Rs 119 million in financial year 20/21 representing a turnover growth of 381% over the last financial year. The Profit Before Tax of the firm stood at Rs 38.6 million.
The company has already completed 23 land development projects in its short history. The company has three ongoing projects that include notable projects in Dompe (254 perches) and Divulapitiya (720 perches).
The company mainly focuses on the Colombo and Gampaha districts. Managing Director Nalin Perera noted that his firm was sacrificing lucrative profits to the banking sector due to a low capital base and higher gearing. He noted that interest cost was weighing significantly on the costs of the business. Perera was adamant that land investments as has been historically the case would beat fixed deposits in terms of appreciation and at a lower rate of risk.
Perera was speaking on November 25 at the Marino Beach Hotel in Colombo at the official announcement of the IPO.
Chairman W D Premachandra noted that the company was looking to ride the wave of growth in the suburbs with the advent of the outer circular highway and central expressway. He noted that recent projects in close proximity to the expressway entrances sold out well ahead of schedule. Premachandra said that the funds raised would help the firm lower the credit application periods the firm has to incur in implementing a new project and thereby make the firm a preferred counterparty for individuals looking to divest their large land parcels.
Premachandra noted that the company was very selective in obtaining lands and once selected was highly effective in getting all necessary clearances from all levels of government for future buyers. Over the long term with the normalising of construction costs the firm hopes to venture into the affordable housing segment. The firm looks to maintain a dividend payout ratio of 20% from the financial year 23/24 onward.
The firm is of the view that given property values exceeding Rs 1 million per perch in all adjacent suburbs of Colombo and the infrastructure necessarily equalising travel times between satellite cities like Gampaha there would be a huge boom in demand for land that currently retails below Rs 200,000 per perch. The issuance is not being underwritten.