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Monday, 16 May 2011 02:11 - - {{hitsCtrl.values.hits}}
Capital Alliance Holdings Ltd., last week entered the finance business with the acquisition of People’s Merchant Finance Company Ltd. (PMF).
It bought 99.9% stake in PMF, formerly Silvereen Finance Company, from People’s Merchant Bank Group for Rs. 430 million.
Controlled by financial market specialist Ajith Fernando, Capital Alliance Group is engaged primary dealership of government securities, stock broking and tea broking.
The sale of the subsidiary by PMB is at a profit as it paid Rs. 287 million to acquire it originally in 2009/10.
PMF has been incorporated 29 years ago and is a Central Bank of Sri Lanka registered finance company based in Kandy.
The operations are carried out only from its head office in Kandy. With access to public deposits, group finance cost could be brought down substantially in the future. The finance companies main line of businesses includes leasing, hire purchase, trade finance and deposit mobilisation.
The total assets of the company as at end 2009/10 was around Rs.300 million. Leasing and hire purchase advances have reduced to Rs.142 million at FY 2009/10 end from Rs.207 million at end of FY 2008/09, a reduction of 31%.
Deposits of the company amounted to Rs. 63 million, down from Rs. 79 million at end of FY 2008/09 with low business operations.
It had a profit before tax of Rs.8.7 million for the financial year ended 31 March 2010.
However due to high income tax charge of Rs.5.5 million profit after tax amounted to Rs.3.1 million.
PMB originally acquired Silvereen as a strategic move since the venture would pave way it to mobilise public deposits for growth of lending activities.
Later on a move to amalgamate the finance company with PMB was mooted but put on hold.
In January this year, following a directive given by the Central Bank, PMB Board decided not to proceed with the decision to take over the assets and liabilities of People’s Merchant Finance Company Ltd., (PMF).
