Kapruka IPO Eagerly Snapped Up, Oversubscribed 5.8X

Investors eagerly snapped up shares of Kapruka Holdings Limited on Wednesday, 22nd December 2021, as soon as the issue opened at 9.am. Witnessing an 5.8X oversubscription within hours of opening, the issue closed the same day at 4.30pm. Kapruka’s IPO has been one of the most enthusiastically anticipated and followed IPOs of the year, drawing interest and attention from a broad spectrum of investors including institutions, high net-worth Individuals and retail investors. The issue received over 4,900 applications for more than 192Mn shares worth LKR 2.9Bn, while only having 32,826,000 ordinary voting shares on offer, with 10% of the issue being allocated to unit trusts, 40% to retail individual investors and 50% to non-retail investors.

Expressing his pleasure at the outcome of the IPO, Founder and CEO, Dulith Herath said, “Today marks a historic milestone on the Kapruka journey. It’s my great pleasure and honour to welcome aboard our new extended family of investors and stakeholders, as we write a new chapter of our growth story here at Kapruka. I take this opportunity to reaffirm our commitment to delivering outstanding value to all our stakeholders, while also expressing a deep sense of gratitude to all investors who have placed their confidence in our enterprise and business model. Some interesting questions were raised on our way to making this initial public offering, and my team and I are pleased to have been able to address these questions satisfactorily. However, there is no greater expression of confidence in our value proposition than having our issue receive such an overwhelming response and oversubscription. Clearly, genuine investors immediately saw the value on offer with this issue.”

Kapruka’s IPO and listing on the Colombo Stock Exchange marks a historic moment, not just for the Company but for Sri Lanka’s economy as a whole, as Kapruka is the first ecommerce business to seek, and meet the necessary compliance requirements for, listing on the Exchange. Through its IPO investors were provided with the opportunity to buy into a 20% stake of Kapruka Holdings Limited at a LKR 15.40 per share, and the company successfully raised the LKR 505.5 million it sought.

Commenting on conclusion of the IPO, Mr. Ray Abeywardena, Managing Director at Acuity Partners – who was the Managers to the issue – said, “We had no doubt that this issue would perform exceptionally and our expectations have been exceeded. We worked to present a company with a solid value proposition and valuation to the public, and insightful investors immediately understood that. Overall, we are very pleased with the interest and consideration this offer received.”

PERs based on annualized EPS for the current year have allowed Kapruka to provide a value opportunity for investors in line with or better than that provided by global peers such as Amazon, Alibaba and eBay. Kapruka’s business model is also supported by solid financials with the Company having recorded 100% growth in its top line in the 1st seven months of the current year, ending 31st October 2021, against the same period during the year prior. Turnover for the period is also approximately LKR 1 billion, with LKR 1.5 billion forecasted for the current year, and the Company is on track to exceed that forecast. Kapruka’s new, state-of-the-art fulfilment centre is scheduled to come online in the 1st quarter of 2022, which will help to further fuel growth and consolidate their supply chains and infrastructure.

Sri Lanka’s first and largest locally-owned e-commerce enterprise, Kapruka was founded in 2002 by Dulith Herath. Since then, it has grown into a multi-billion-rupee enterprise without any external investors, until now. The organic growth of Kapruka to date is a unique attribute of its strong business model. The Company caters to over 1.1 Mn expatriate Sri Lankans, predominantly in the USA, who regularly use Kapruka to send gifts to their family and friends in Sri Lanka. Further, the Company offers Sri Lankan brands on global e-commerce platforms such as Amazon, eBay, Etsy and Walmart, and is the e-distributor/e-commerce retailer for well-established brands such as Dilmah, Akbar Tea, Link Samahan and many more. Kapruka is also one of the few e-commerce companies in Sri Lanka that generates US dollar revenues by serving expatriate Sri Lankans and other global customers. The Company has its central office located in Colombo, along with offices in the USA, the UK and Australia.