Two Ashok Pathirage controlled firms, Softlogic and Asiri Central Hospital plan to raise over 3.7 billion rupees through a private placement of shares followed by two IPO’s this year, he said.

“We are planning to raise three billion through a private placement followed by a share issue,” says Pathirage, referring to funding plans of Softlogic, a consumer electronics and retail business. “Some of the money will go to retire debt. “

A second IPO this year will raise capital for a new hospital ‘The Central’ already nearing completion. The hospital, which opens for business in February, raised 1.7 billion rupees from a private share placement last year.

A ten percent stake will be offered through an IPO to raise 700 million rupees this year.

However Stock Exchange rules disallow IPO’s within a year of a private placement of shares. “We will talk to the stock exchange to see if we can bring this forward.”

The Asiri Hospitals group is the largest private sector hospital chain in the island. Its newest hospital, ‘The Central’ is located on Norris Canal road in central Colombo.

Construction cost overruns forced the venture to seek new equity earlier than planned.

In December last year, Pathirage raised 1.7 billion rupees through a series of private placements. John Keells Holdings acquired a 25 percent stake in the 270 bed hospital for a billion rupees while other firms including Union Assurance Plc and Aureos South Asia Fund LLC acquired another 700 million worth equity.

Half the 4.5 billion rupee hospital construction cost was financed through a syndicated loan.

However the better than expected interest in the private placement gave the firm more breathing space in the face of cost escalations. “We were actually planning to raise 1.5 billion rupees but there were too many people who wanted to buy so we had to restrict it. It was very successful.”

However, the hospital group’s is still highly leveraged. Pathirage disclosed that negotiations with International Finance Corporation, the private sector funding unit of the World Bank, are at an advanced stage to restructure the debt. “So most probably with IFC we might restructure our debt further. If everything goes well by July IFC should be inside our hospital group,” he said.

Despite the debt burden Pathirage believes the takeovers were a good move.

“If you look at the dividend pay out, in that sense you can’t say that we have got the return on investment. But if you look at the market capitalization from that time to now it is four five times” says Pathirage who‘s geared to peruse every opportunity in the health care sector. He adds, “We are not in this business to exit”.

Pathirage who identifies himself as “a risk taker” is optimistic his new hospital will turn around soon. Speaking to us last June he said “We hope within three years EBITDA from the new hospital to be around seven hundred to eight hundred”.

Softlogic IPO

John Keells Holdings - self made billionaire Ashok Pathirage’s employer for nine years - is among firms keen to invest in Softlogic, a consumer electronics retailer.

Pathirage forecasts to raise about 1.2 billion rupees though a private placement of shares.

He is also talking to a several foreign funds. “We prefer to sell it to one entity, failing which there maybe two or three. It can be local as well.”

Softlogic also has substantial debt, some of it at high interest rates.

“Sometimes time is money. You can’t wait until the rates to come down to make decision,” claims Pathirage who grew his retail and hospital businesses by leveraging.

Softlogic, started as a software developer and reseller two decades ago, now operates over a dozen companies, one of which has the sole distributorship for Nokia phones in Sri Lanka. Softlogic Trading meanwhile is the authorized dealer for DELL computers here. Later it acquired Uni Walkers, a struggling firm that had the Panasonic distributorship here.

In 2006 Softlogic diversified in to healthcare by acquiring Asiri Hospitals PLC. Pathirage now controls the Asiri Hospitals group.

The Asiri Hospitals Group has four hospitals three of which are in the Colombo city and the forth in the Southern town of Matara .

The Softlogic IPO is planned to happen after a private placement of its shares.

Pathirage, who claims to be “an aggressive businessman by nature” says a valuation for the firm is being worked out.

He plans to retain a controlling stake after the equity raising.

Recently the firm entered readymade clothes retail when its subsidiary Uni Walkers took over the master distributorship for the Jeanswear brand Levi’s.

“Our future is going to be mainly on the retail side. If you look at the retail business in Sri Lanka it’s a virgin market. So there is so much scope,” says Pathirge.

“We have managed to somehow service every bank loan we have taken without difficulties. And today we are in a better footing because the rates have come down”.

“Our vision is to be a regional player.” Pathirage added.