Rothschild interested in Port City

CEYLON TODAY | Published: 2:00 AM Feb 25 2021
Columns Rothschild interested in Port City

On 15 January 2021 Nathaniel Rothschild, a British Born Financier settled in Switzerland visited Port City as part of his business tour of the island. He is the first possible key investor to visit Sri Lanka after the change of Government. Port City has placed several blocks of reclaimed land including a Marina for sale. Backers can choose from 15 billion dollars of investments to build a city within a city.

Sri Lankan born British politician and former European Union parliamentarian Niranjan Deva Adithya and business executive Rajan Brito accompanied Rothschild. Media reports said Rothschild displayed an interest in the project, particularly the Marina and the hospitality plots.

After completion of his visit in Sri Lanka Rothschild tweeted “Just finished a trip to learn firsthand about SL’s suitability as a manufacturing location for electronics. Came away highly impressed by the Government of President Rajapaksa and its pandemic response, as well as the businesses I met. SL is a true gem with a great future, #GoSL #SriLanka”. To obtain such a positive comment from a world renowned investor is a pat on the back for Sri Lanka who is trying hard to revive its economy after the COVID-19 smack.

S & SE Asia

Rothschild & Co has been in operation for over 40 years in South East Asia dating back to 1973. Today, they are present in five countries across the region and India is their only presence in South Asia. In spite of the COVID-19 pandemic they performed really well on India’s deal street as it kept working on a pipeline of deals worth billions of dollars. The domestic deal activity managed to remain green during the first half, thanks to the unprecedented stake sale by Reliance Industries in “Jio” platforms between April and June worth nearly USD 15 billion through 11 deals. This enabled the overall deal making to grow 14.5 per cent to USD 43.8 billion in the first half of 2020, according to the numbers collated by mega markets.

According to Aalok Shah, managing director of Rothschild  & Co in India, the Bank had reasonably good  first half as it completed three large deals. The USD 490 million Piramal-Carlyl deal, USD 900 million Edelweiss-Engie deal and TVS’s buyout of British bike company Norton Motorcycles, and is working on a number of deals which could be completed in the second half.Rothschild’s India team is currently working on deals worth over USD 4 billion across pharma, IT and power sectors. Hence, if Rothschild happens to start its operations in Sri Lanka, we can certainly predict a significant growth in the development of key areas like Infra Structure and IT. More importantly, I believe IT sector will show a significant boom since, Sri Lanka is quite well known for quality in the IT sector worldwide. Port City itself has lot to do with the Infra-structure development. Hence, Nathaniel Rothschild’s arrival is most opportune as far as future development prospects of Sri Lanka are concerned.

Yacht Marina sector

In 2007, Lord Jacob Rothschild along with LVMH Chairman, Bernard  Arnault, Russian oligarch , Oleg Deripaska set out to develop the largest private sector investment in Montenegro. Located near coastal city of Tivat, Porto Montenegro’s ambition was to become homeport for some of  the world’s largest yachts by providing their crew and visiting  owners with high end facilities. The development also included the construction of a robust eco system around marina with condos, restaurants and a five start hotel. Over its several year Rothschild along with its other investors has ensured that it get the attention of new investors and in May 2016 it was confirmed that the development was acquired the investment corporation of Dubai, the  city-state’s investment arm. Currently, Porto Montenegro has 450 berths  for yachts from 12 to 250 meters in length (with a capacity to expand to 850 berths),300 sold out luxury apartments, as well as 60 units of ground floor retails with restaurants, bars, cafes, shops and amenities and a five –star Regent Hotel with over 130 luxury suites  and apartments.

In 2019 Rothschild along with several other investors were instrumental in investing over 500 million Euros in further developments and new projects on site over next 10 years. In addition the managers of Port Montenegro reported that alongside upgrades to Porto Montenegro Yacht Club, the village also embraces new business dimensions offering co-working spaces and new office hubs. This speaks per volumes as how a project like Porto Montenegro has developed a small Caribbean village in to a significant commercial hub improving the livelihoods of people. 

The success story of Porto Montenegro established by the Rothschild Corporation along with few other investors is truly an inspiration to a country like Sri Lanka. If Nathaniel Rothschild start investing in Port City Marina, it will enable Sri Lanka to realize its vision to become a Commercial Hub in the region. Currently, the main Yacht hub in Asia is Singapore and with the unique location of Sri Lanka at the very centre of the Indian Ocean, they will certainly be able to give a serious competition to Singapore as the emerging Yacht hub in Asia. An investment like this will encourage many regional business tycoons to come to Sri Lanka to discuss about new business deals. Hence, this will improve a niche segment of tourism in Sri Lanka, which is called investor tourism.

One of the first development plans announced by the Government was developing Galle Harbour in to a Yacht marina zone. Therefore, converting Galle Harbour in to a yacht marina zone further improves the status of the Port City marina zone since, it will enable Yachts to spend more time in Sri Lanka and spend time in two yacht marina destinations.  This will enable Galle to rise as the second commercial hub of the country with time. Moreover, with the development of both yacht marina zones Sri Lanka will be the only country in South Asia and South East Asia to have two yacht marina zones. This will certainly enable them to have an edge over Singapore to become the yacht hub of Asia.

Rothschild’s capacity in electronic manufacturing and related investments

Rothschild Instruments located in Switzerland is the electronic manufacturing wing of Rothschild’s corporation. They are involved in development, construction and marketing of electronic testing instruments for the textile industry. The company was registered in 1958 and is today one of the renowned firms worldwide in its niche segment. They produce electronic instruments such as Electronic tensiometer, Memo-tens, Mini-tens, Friction meter, Cohesion meter and etc. Sri Lanka is one of the leading producers of textiles and apparel in the World. If Sri Lanka can get Rothschild instruments to produce their electronic items in Sri Lanka, Sri Lanka might be ending up reaping more profits by exporting these instruments to countries like India and Bangladesh where Apparel and Textile production happens in a larger scale. Moreover, Sri Lanka will be able to retain money spent on these instruments.

Sri Lanka caught the eye of investors as a business destination to produce electronic items way back in 1980, when businessman and investor Upali Wijewardene, travelled to Silicon valley and signed 5 agreements there, including one with Motorola. The construction of the Chip plant started in 1983, but the war and the ensuing bombings killed some of the engineers assigned for construction of the plant, which led the chip manufacturers to leave Sri Lanka for Malaysia.

After almost 18 years and more importantly 11 year after ending the separatist war, Sri Lanka has got a fresh opportunity providing the best possible environment for  investors to invest in the field of electronics.

CSE takes off

Following Rothschild’s visit the Colombo Stock Exchange (CSE) got off to a stellar start in 2021 with trading activity in new year already achieving 30 per cent of the last year’s 4th quarter  full performance of three months. The Colombo stock exchange posted highest intra-day gains recording an All-Share Price Index (ASPI) of 291.34, stock market sources said. Colombo stockmarket ended up as the 

CSE was buoyant  that a well-known International investor paid a brief visit to Sri Lanka to look in to the business potential of the Port city Colombo had expressed willingness to continue dialogue with Sri Lankan authorities with regard to possible future corporation.

On the share front, a share volume of 433.5 million traded in 60,818 transactions with crossings from Dipped products, Amaya Leisure, John Keels Holdings, Commercial Bank, Expo Lanka, Tokyo cement (non-voting), Aitken Spence and Softlogic holdings.

Even though on 2 February 2021, the CSE recorded an all share price index made its biggest single day points loss in history by dropping 561.75 points to close at 8005.32 points. They are still maintaining a higher ASPI compared to that of December 2020.

Rothschild’s visit inspire investors 

The visit of Nathaniel Rothschild to Sri Lanka created quite a  buzz around the investor community and on 23 January 2021, the serial entrepreneur and Sillicon valley investor Insaaf Mohideen arrived in Sri Lanka for a brief visit under the investor bubble scheme. Insaaf Mohideen is a large scale investor in alternate asset classes and has managed sovereign wealth across 4 countries. He was accompanied by Jezri Mohideen, managing director and global chief digital officer at Nomura International PLC.

Media reports suggests that Insaaf and Jezri  Mohideen discussed investment opportunities pertaining to Information Technology, Real Estate, Business turnaround and Capital Markets during their stay in the country.

The state minister for Finance and Capital markets, Ajith Nivard Cabraal stated on Decembe 16th of 2021 that Sri Lanka is targeting 2.5 billion US Dollars in foreign direct investments in 2021. Having made his remarks clear to the media the current government has been certainly reaping some success in achieving that target. Arrival of major investor like Nathaniel Rothschild and his positive comments on Sri Lanka as an investment paradise was certainly what this country needed so badly in order to attract more investors who could really bringing some projects to Sri Lanka that will impact in improving Sri Lanka’s GDP. 

The Covid-19 pandemic hit Sri Lanka quite badly and all the rating agencies including Fitch, Moody’s and Standard & Poor downgraded Sri Lanka in to CAA-1 status. However, with the arrival of a business magnate like Nathaniel Rothschild, Sri Lanka has been able to restore trust in global investors. Amidst few trade liberalisation policies being executed by the Sri Lankan government through incumbent President’s election manifesto Sri Lanka can certainly emulate the success story of Vietnam in the coming years.

Navindu Deeptha  Kalansuriya

CEYLON TODAY | Published: 2:00 AM Feb 25 2021

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