News
18 March 2011
Teejay (Private) Limited (Teejay), a joint venture between Hong Kong listed Pacific Textiles Holdings Limited (Pacific Textiles)and Sri Lanka's Brandix Lanka Limited (Brandix Lanka), had invited for application of a Rs1.74 bn pre-IPO share placement, prior to seeking a listing on the Main Board of the Colombo Stock Exchange (CSE).

A 20% stake in Teejay was to be divested by its existing shareholders to qualified investors during the pre-IPO share placement last week, with the issue being comfortably oversubscribed despite it being offered to only selected investors, with a minimum subscription threshold in excess of Rs 50 mn.

The Company expects to shortly submit its IPO listing application to the CSE, wherein a further 10% of Teejay is proposed to be offered to the broader investing public by way of a fresh issue of shares at the same pre-IPO placement price, subject to receiving CSE approval for same. This new issue is expected to raise Rs1.2 bn, with approximately 30% of Teejay to be in the hands of the public post-listing on the CSE.

Mr. Bill Lam, Chief Executive Officer of Pacific Textiles Holdings and Director of Teejay, also said that the listing would enable Teejay to take advantage of potential growth opportunities in both Sri Lanka and the South Asian region. "High global cotton prices is an industry-wide headwind at present, but we believe this will facilitate industry consolidation in the longer term as stronger players continue to gain market share " said Mr.Bill Lam. Cotton plantings acreage would also increase in response to the higher prices stated Mr. Bill Lam.

Teejay is one of Sri Lanka's most sophisticated production facilities, manufacturing knitted fabrics for the intimate apparel and sportswear industries. Specialising in the manufacture of high quality, weft-knitted and dyed stretch fabrics, Teejay is a major supplier to apparel manufacturers throughout Asia and end-chain retailers. Amongst its largest clients are Victoria's Secret, Marks & Spencer and Intimissimi. Infrastructure at the 650,000 sq. ft facility in Avissawella enables a capacity to knit, dye and finish up to 2.5 million meters of fabric a month.

Despite facing challenges in the form of rising cotton prices, high energy costs and loss of tariff concessions, Teejay has delivered strong financial results during the past five years, with net profit rising at a CAGR of 22% to US$5.0 mn in the year ended 31 March 2010.

Mr. Ashroff Omar, Chief Executive Officer of Brandix Lanka and Director of Teejay, said that the Company was both honoured and humbled by the confidence and trust placed by investors in Teejay, and emphasized that the listing would provide Teejay with greater operational flexibility and a separate independent platform to raise funds from the capital markets to support its future growth aspirations. "Knitted fabric is the fastest growing segment of the Sri Lankan apparel export market, which is growing strongly even after the end of the GSP+ concessions in August 2010, and Teejay is the country's pre-eminent producer of value-added knitted fabric" stated Mr. Omar.

The Hong Kong listed Pacific Textiles is a leading manufacturer of customized knitted fabric in the global textile industry, with a focus on complex, value-added fabrics. It has one of the largest textile manufacturing facilities in China, and provides integrated services of knitting, dyeing, printing and finishing, with an annual production capacity of approximately 87 million kg. PTH reported a 21% YoY increase in revenue for six months ended 30 September 2010 to HK$ 3.7 billion, with net profit attributable to shareholders rising by 17% YoY during the same period to HK$ 453 million.

Brandix Lanka is the largest apparel exporter in Sri Lanka. It is engaged in developing, manufacturing and marketing end-to-end apparel solutions to global fashion superbrands such as Victoria's Secret, Gap, Next, Marks and Spencer, Liz Claiborne, Abercrombie and Fitch etc. The group specialises in casual bottoms, intimate and active wear, woven and knitted fabrics and a host of apparel industry accessories. The Brandix group has 25 plants islandwide, in addition to other facilities in the South Asian region, and strategically located international sourcing offices, and directly employs over 25,000 people in Sri Lanka.

Teejay is being advised by investment bankers CT Capital (Pvt) Ltd and Acuity Partners (Private) Limited, who are also acting as managers to the capital raising and listing exercise.