ECONOMYNEXT – Guardian Capital Partners, part of Sri Lanka’s Carson Cumberbatch group, shifted most of their cash into fixed deposits with no investment deals done in 2018.
The company, the private equity investment arm of Carson’s Ceylon Guardian Investment Trust Group, made a 14.4 million rupee net profit last year compared with a loss of 22.6 million rupees the year before.
“The flow of deals and transactions in the overall private equity and venture capital space continued to be challenging and slow, Guardian Capital Partners chairman I. Paulraj told shareholders in the firm’s annual report.
“We did evaluate a few deals, however, we did not pursue them as they did not meet the company’s investment criteria.”
Guardian Capital Partners is focused on investing in private equity and venture capital opportunities in identified growth sectors in the country, seeking to partner with unlisted mid and large scale companies.
The improvement in 2018 was primarily driven by the presence of large impairment losses in 2017 as well as book gains recorded on the unlisted investments during the current year, the report said.
A significantly higher tax charge resulted in an effective tax rate of about 44 percent in 2018.
“The increase in tax charge was due to interest income earned on the non-invested cash being subject to taxation this year,” Guardian Capital Partners said.
“Last year, this cash was invested in fixed income Unit Trusts, and as they enjoyed a tax benefit, the income generated was not subjected to tax. However, this benefit was removed in April 2018.
“Given this and in order to optimize the yield, the majority of the cash balances were shifted to fixed deposits in high quality financial institutions.”
(COLOMBO 9 May 2019-SB)