Thursday Nov 14, 2024
Thursday Nov 14, 2024
Monday, 11 August 2014 00:00 - - {{hitsCtrl.values.hits}}
A: We are happy to note that the total bids received were significantly higher than the Issue amount and the Issue closed within hours of the Issue opening day itself, reflecting the strong investor confidence in the bank. The success of this Issue will provide a good platform for the bank to build on its strong performance and successfully pursue its growth strategies during the year. We extend our heartfelt thanks to all subscribers for their support in making this Issue a great success.
Q: The funds were raised at a coupon rate substantially lower than previous issues in the market. It was also the first single-digit Issue for a non-state entity. How were you able to achieve this?
A: Yes, it is indeed a great achievement for us that we were able to raise funds at the lowest cost, whilst other similar rated Issues were raised at much higher rates in the recent past.
DFCC’s stature in the banking industry as experts in project financing coupled with its financial strength enabled us to go in on a bold and aggressive interest rate. Further, we were able to enter the market at the right time relying on the expertise of our excellent team of professionals who were able to read the interest rates and pin point the exact and appropriate timing.
Q: What purposes will the funds be utilised for?
A: Well, DFCC Bank has been in the business of contributing towards the sustainable development of the country. Thus, the funds were raised primarily with the intention of supplementing and strengthening the funding base utilised for the project lending activities of the bank, the development of SMEs being of paramount importance.
In recent times there has been rapid development in the country, and the Government has expressed the importance of developing the 5+1 hubs in its drive to shift Sri Lanka beyond a middle income economy. In this context, DFCC intends to actively support this initiative having aligned its strategic plans in full support. With its expertise of nearly 60 years, the bank will utilise these funds to nurture entrepreneurs and industries, providing total solutions to develop sectors prioritised in the Governments development agenda.
Q: DFCC Bank has a strong track record when it comes to securing long-term funds. What factors have contributed towards this?
A: DFCC Bank, over the years has been able to raise low cost funds from a mix of multilateral and bilateral agencies in both international and domestic markets. One of the main contributing factors has been our business model, which has enabled us to mobilise long term funding sourced outside Sri Lanka reducing our dependence on domestic capital.
Secondly, having been in the project financing business for nearly 60 years, DFCC has developed good relationships with both multilateral and financial institutions, most of whom regard DFCC as a preferred conduit for their on-lending to local projects. The bank is well reputed amongst the international community.
Recent examples of our success which is indicative of the high esteem DFCC is held by agencies in the multilateral financing community, includes the raising of the $ 100 million five-year funds from the landmark international debt Issue, based on the strength of the bank’s own balance sheet. This was a noteworthy achievement given the volatility of the debt markets that prevailed at the time, and is a strong testament to the international investor confidence in the bank.
Another commendable achievement was when DFCC secured a line of credit for EUR 90 million from the European Investment Bank (EIB) in early 2014. These concessionary funds are being deployed in medium to large scale enterprises especially in the provinces and energy efficiency and renewable energy projects. Based on DFCC’s unparalleled track record of managing multilateral credit lines, the bank was also EIB’s clear choice to be manager/administrator of the program.
Q: What are DFCC’s plans for the medium term?
A: One of the main areas of focus will be capitalising on financing the direct and indirect business opportunities that will be created by the Government’s 5+1 hub strategy. We will use the expertise we have amassed in areas such as tourism and renewable energy to strengthen our capabilities.
Of course, the importance of SME’s in the bank’s portfolio will remain a priority as well and this sector will benefit greatly from the low cost financing sourced from the European Investment Bank (EIB). We will also be focusing on international markets. DFCC was chosen by two financial institutions overseas to provide consultancy and management services and this has already established the banks credentials overseas for fee based services so we will definitely be looking at pursuing assignments aggressively. Another component of this is that we aim to partner our customers in venturing overseas and this will be another initiative that I believe will set the stage for bigger things in the future.
Throughout our operations, we will continue to apply our five pronged strategy of building stronger and more profitable relationships by providing customised solutions, leveraging synergies across our main businesses, capitalising on our core strengths whilst nurturing our most valued assets; our employees, and carefully managing costs. This strategy has been proven by our success over the past decades and will be the cornerstone for the years to come as well.
Q: How will this Issue affect the consolidation of DFCC and NDB which is expected to go through?
A: Well, I have to say that there is a lot of preliminary work that needs to be done at this stage and all three banks that is DFCC Bank, DFCC Vardhana Bank and the National Development Bank are working together with the utmost cooperation. The consolidation will result in the coming together of very strong players in the financial industry and result in many positive outcomes for the financial sector.
The funds raised from this Issue will contribute towards our financial strength. DFCC Bank also possesses diversity of financial business, untapped value of key assets and with DVB a multiplicity of distribution channels to name a few. When it comes to our intangible assets, DFCC’s stature in the banking industry is impeccable, our expertise in the realm of project financing is unmatched; time and time again we have proven ourselves as the preferred partner for project financing because we have been willing to go the extra mile to help fledgling businesses and futuristic ventures that are now thriving enterprises.
