Senkadagala Finance debenture issue opens on 6 December
Monday, 2 December 2013 00:00
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In the wake of the success of its May 2013 issue, Senkadagala Finance PLC will launch its second debenture issue, opening on 6 December 2013, which is undertaken for the purposes of strengthening the company’s Tier II, long-term capital structure.
The rated, subordinated, unsecured, redeemable, five-year debenture issue is to be listed on the Main Board of the Colombo Stock Exchange and is jointly managed by Taprobane Wealth Plus Ltd. and Capital Alliance Partners Ltd. The other parties to the Offer are: Trustees – Deutsche Bank AG, Colombo; Lawyers – Nithya Partners; Registrars – Managers & Secretaries Ltd.; Bankers – Commercial Bank of Ceylon, Foreign branch; Auditors – KPMG, Kandy branch; and Rating Agency – Fitch Ratings Lanka Ltd.
Notably debenture issues listed after 1 January 2013 are exempt from both Income Tax and Withholding Tax. Consequently, the Colombo Bourse witnessed debentures amounting to almost Rs. 50 billion worth, being listed since the beginning of this year to date, with the developing momentum of the listed corporate bond market still continuing to rise.
The five-year debenture issue of Senkadagala Finance PLC offers the investors an ideal opportunity to fix their returns at 15.00% p.a. quarterly (AER 15.87%), which is very attractive and makes way for a lucrative investment, especially as the interest rates are expected to dip further in the future.
Core business lines
The core business lines of the company ranges from extending finance lease and hire purchase facilities, commercial loans, pawn brokering, bill discounting, investment in money market instruments and accepting deposits in terms of fixed deposits, term deposits, certificate of deposits and savings deposits.
Apart from these activities the company is also engaged in providing insurance brokering services through their newly formed subsidiary dedicated to this area of business, which commenced operations in January this year.
Senkadagala Finance PLC operates from 58 locations far and wide of the country which include 39 branches and 19 service centres with the most recent addition to its branch network being the fully-fledged branch in Jaffna. The company has also received approval to operate five more branches, which would be positively strategised into their future plans.
Rights issue
The debenture issue would be followed by a 1 for 10 rights issue of Rs. 40 per share, aimed at raising Tier I capital of Rs.213 million, which would serve to further strengthen their long-term capital structure. Senkadagala Finance PLC commands a market capitalisation of Rs. 2.7 billion and as at 30 September 2013, the company’s total asset base and equity base amounted to Rs. 14.7 billion Rs. 1.7 billion respectively.
The gradually increasing deposit base and the continuously low NPL ratios signifying a quality asset base, bears testimony to the strong management skills and sustainable growth achieved by the company, throughout its 45 years of operational history.
Established in 1968, Senkadagala Finance PLC is one of the largest licensed deposit taking financial institutions in the country, which is registered by the Monitory Board of the Central Bank of Sri Lanka. The company possesses a BBB+ (lka) investment grade rating by Fitch Ratings Lanka Ltd and its Rs. 1 billion listed debenture issue in May this year was oversubscribed by 2.38 times on the same day of opening.
