Resurgent Asian Asset finance Limited announces Rs.425 million IPO

By Devin Jayasundera

Asian Asset finance Ltd. a company which has been revitalised under a new management in the recent years announced its intention to divest a 27.8% stake of the company to the public through an initial public offering.

Due to the impressive transformation attained by the new management after the take over in 2009, Asia Asset Finance has been progressing steadily in the business of financial assets marketing.

According to Asian Asset finance Limited Head of Research and Co-op Finance Saminda Weveldeniya the company was making a loss of Rs.175.6 million but after the take over by the new management the company is on path to make Rs.100 million by the end of the financial year 2012”.

He explained the success story behinds this is that the management looks at the market space as a ‘blue ocean’ and competition as an irrelevant entity.

From 2009 onwards we have been putting up new products and new initiatives, this has enabled us to set apart from the competition”.

In regard to the low Net Assets Value of the company Weveldeniya responded saying that “When a company is making losses eventually as a result of it the capital also erodes. At this point of time the NAV may be low but Asia Asset Finance is projected to grow by 90% and on average 45% annually.  Asia Capital Chairman Manohan Nanayakkara added that NAV is a poor indicator for companies that have a potential for strong growth.

In regard to the future of the financial sector of the country Nanayakkara stated that it lies in the demographics and the structure of finance in Sri Lanka. “Approximately 1.6 million people will retire in the country over the next 10 years. Because of this Rs.100 billion EPF is going to be broken up to bits.  The future of the finance companies depends on how efficient and intermediate between the holders of money and the financial market”.

Asia Asset Finance Chairman Dayananda Muthukumarana divulged that the company recorded 185% growth in profitability, 67% reduction in non performing loans and 95% staff retention rate over the last financial year projects the firm foundation that Asia Asset Finance has built for the future”.

120 million shares are to be issued initially and if the option being exercised it can be extended to another 50 million shares. A share is offered at Rs.2.50 each and Asia Asset Finance is expected to raise Rs.425 million. The issue opens on 28 November and will close on 15 December, 2011.

The company also introduced a concept called Business Club in its efforts to enhance and build customer relationship through providing credit facilities to maximise revenue generation to facilitate repayment of their loans.