Summit Finance goes for Rs. 283.5 m Rights

• Prime Lands investment in venture to rise to Rs. 906 million

Summit Finance, now owned by Prime Lands, has announced a Rights Issue to raise Rs. 283.5 million.

The Rights will be on the basis of three for five held offering 13.5 million shares at Rs. 21 each.

Proceeds from the issue will be used to comply with the Central Bank requirement of minimum capital infusion of Rs. 275 million. Summit Finance’s current stated capital is Rs. 225 million.

The share closed on Friday at Rs. 28.90 whilst net asset per share is Rs. 14.54 as at end 2016.

Prime Lands holds 94.55% stake in Summit Finance Plc following a mandatory offer in March this year. It triggered the SEC’s Takeovers Code when it purchased 75.54% stake in January for Rs. 510 million or Rs. 30 per share. A further 19% stake was acquired via the offer for Rs. 128.3 million.

If Prime Lands takes the Rights Issue entitlement, it will invest a further Rs. 268 million, bringing the total investment in Summit Finance to Rs. 906 million.

Sarvodaya Development Finance sold the original controlling stake of 75.54% while the next biggest shareholder, Dr. T. Senthilverl with 11% stake, exited via the mandatory offer.

Summit Finance had Rs. 1.43 billion worth of assets by end 2016 and liabilities amounting to Rs. 1.1 billion. Shareholders’ funds amounted to Rs. 327 million, including Rs. 94 million in retained earnings.

Prime Lands also owns 47.5% stake in HNB Grameen and the acquisition of Summit Finance will further strengthen its foray into the financial services market in addition to its growing footprint in the property, real estate and housing sectors.