Thursday, 20 February 2014 00:00
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Largest international PE investment into a Sri Lankan LFC
Leading frontier markets private equity investor, Creation Investments Capital Management LLC, through its wholly-owned subsidiary, Creation Investments Sri Lanka LLC, has agreed to invest Rs. 1.68 billion (US$ 12.8 million equivalent) into one of Sri Lanka’s leading finance companies, Commercial Credit and Finance PLC (CCF).
The transaction will involve the issuance of 80 million new shares for a consideration of Rs. 1.68 billion or approximately 25.15% of CCF. The transaction has received the necessary CBSL, SEC and CSE approvals and will be completed subject to shareholder approval.
This is the largest investment by an international private equity fund into a publicly listed Sri Lankan licensed finance company and is a strong validation for the success of CCF. Creation is impressed by the strength of CCF’s leadership and commitment to the mission toward serving the under-banked population in Sri Lanka.
The offered price at a significant premium to the trading value and NAV indicates strong future growth potential for the company. The new funds will be used by CCF for its future investment activities including further enhancing its branch network and expanding its asset and client base, and to meet the future capital adequacy requirements of the company.
Creation has invested in many banks and finance companies across emerging markets and its investment into CCF will help provide guidance and support to CCF and promote best practises from its other international portfolio investments. The new equity investment will also strengthen the capitalisation of CCF and enable it to access international debt capital at attractive rates.
York Street Partners Ltd. acted as Sole Financial Advisor to the transaction. Varners was the Legal Advisor to CCF and FJ&G De Saram was the Legal Advisor to Creation.
CCF CEO Roshan Egodage commented on the transaction saying, “We are committed to providing a wide range of financial products to the Sri Lankan consumer including a variety of microfinance and SME products combined with a high quality service which is part of our core values. Our partnership with Creation will enable us to continue this journey and grow the company towards becoming Sri Lanka’s leading licensed finance company.”
Creation CEO Patrick Fisher added: “This is our first investment in Sri Lanka and the largest investment that we have made to date across our Creation Investments Social Venture Funds. We look for quality investment opportunities across many emerging and frontier markets globally. CCF exemplifies what we look for in prospective investments – market leadership, exceptional management, and alignment in the mission, vision and values. CCF is a leader in the Sri Lankan LFC sector given its tremendous growth in the past few years. We are excited to partner with the CCF team in supporting their future growth plans.”
“This was a complex transaction that required careful negotiation through several structured options as well as regulatory approvals,” Sujendra Mather, MD at York Street Partners said, reflecting on the transaction.
He added: “We are delighted to see the successful outcome of this transaction which is truly a win-win for both CCF and Creation and comes at an opportune moment when several key changes are taking place in the financial services landscape in Sri Lanka.”
