Raj part sells personal stake in JKH but remains a major shareholder

(January 10, Colombo, Sri Lanka Guardian) Although Mr. Raj Rajaratnam, a major investor in listed companies in Sri Lanka, last week sold out a substantial 28 million shares in John Keells Holdings he personally held at a price of around Rs. 179/180 per share, he continues to own 20 million JKH shares and remains among the top 20 shareholders of the conglomerate, market analysts said yesterday.

Rajaratnam who with nearly 49 million shares (8%) was the second biggest shareholder of the blue chip conglomerate which is the biggest market capitalized company quoted on the CSE would still be within the top ten shareholders of JKH, company sources said.

The Sri Lanka-born Rajaratnam who is a US citizen, now facing insider trading charges in New York over activities of his Galleon Hedge Fund, earlier sold substantial stakes held by Galleon in JKH and other blue chips quoted on the Colombo bourse.

``Galleon exited from JKH before Rajaratnam’s problems surfaced,’’ sources familiar with his Sri Lanka portfolio said. ``He was expected to retain his personal stake but he has sold part of it at a price better than what Galleon got earlier.’’

Analysts said that JKH is now around 50% owned by foreign funds with some new funds, entering its share register. These include US-based Janus which began buying into the stock at Rs. 141 later taking a big block of 7.5 million shares at Rs.154.

Well informed sources said that at least one top domestic investor in the group had bought two million shares from Rajaratnam last week.

Analysts believed that Rajaratnam who was not looking to sell when JKH was trading at around Rs. 140 to Rs. 145 would have felt that the opportunity to profit was too good to miss when the price approached Rs. 180.

``It looks like those foreign funds looking to sell have already done so,’’ a well informed broking source said.

In addition to his quoted investments, Rajaratnam invested USD 3 million in an unquoted company, Star Packaging, with which the Hirdaramanis and Hussaiffa Abdulhussein re involved.

The CSE, which crossed the trillion rupee market capitalization barrier for the first time last year, announced last week that 2009 was the best year in its history with the Bloomberg news wire rating it as the world’s second best performer for the year.

Despite this stellar performance foreign investment on the Colombo bourse weakened in 2009 with a net outflow of Rs. 788.9 million – the first outflow since 2001.

This was mainly due to Galleon, winding down its activities, selling significant holdings in several blue chips but CSE said in a statement that the fact that these divestments were ``easily absorbed by domestic investors without an adverse price impact was an encouraging factor.’’

In 2008, CSE posted its largest ever net foreign inflow of Rs. 13.9 billion.