Taprobane successfully manages largest non-bank listed debt issue

Taprobane Wealth Plus Ltd., a subsidiary of Taprobane Holdings, has successfully managed the Rs. 6 billion listed debenture issue of People’s Leasing & Finance PLC (PLC), which notably equals the largest listed debenture issue on the Colombo Stock Exchange (CSE).

The high demand for the issue witnessed the oversubscription of both the Rs. 3 billion initial tranche and the balance tranche of Rs. 3 billion on the opening day of the issue, which is a landmark achievement in the history of the CSE’s listed debt market.

The overwhelming success of the PLC’s listed debenture issue mirrored the instant oversubscription of their Rs. 7 billion Initial Public Offering in late 2011, which symbolises the highest investor confidence in the company and also serves to enhance the success story of this remarkable entity, who has managed to retain the number one position among the leasing establishments in the country, consecutively for the last 10 years in its relatively short 16-year operational history.

The listed, senior, unsecured, redeemable debenture issue was assigned an ‘AA-(lka)’ National Long-term rating by Fitch Ratings Lanka Ltd. and was jointly managed by Taprobane Wealth Plus Ltd. and Investrust Capital Ltd. The other parties to the offer were trustees – Deutsche Bank AG, Colombo, lawyers – Nithya Partners, registrars – SSP Corporate Services Ltd., bankers – People’s Bank and auditors – Ernst & Young, Chartered Accountants.

The success of PLC’s maiden listed debt issuance follows in the wake of the company launching a fresh corporate identity along with a new logo pursuant to obtaining the license to conduct finance business from the Monetary Board of the Central Bank of Sri Lanka.

PLC is presently Sri Lanka’s largest non-bank financial institution in terms of advances and assets, and the highest rated finance company (national long-term rating of AA-(lka) from Fitch Ratings Lanka Ltd.) and also carries the rare distinction of being the only Sri Lankan non-banking financial institution to have received two international ratings.

The first of the two international ratings achieved by the company is equal to the sovereign from Standard & Poor’s with a B+/B and the second international rating a notch below the sovereign from Fitch Ratings International is rated a B+.

Taprobane Wealth Plus Ltd., the corporate finance arm of the Taprobane Holdings Group, played a leading role in managing the offering and sourced almost 60% of the Rs. 6 billion fund raiser. It was in February 2010 that Taprobane Holdings Group ventured into corporate finance activities, which extends to both debt and equity issue management.

To date, the company has arranged, structured, managed and placed several short-term, medium-term and long-term debt issues for companies across an array of sectors, which is inclusive of debenture issues and asset/mortgaged backed securitisation facilities, commercial papers, promissory notes etc. As a part of equity issue management, the corporate finance arm of the group has managed initial public offerings (IPOs) of shares of companies in the diversified sector and power and energy sectors and has also managed listings via introductory method.

In October 2012, owing to the success of its corporate finance outfit, Taprobane Holdings Group launched a separate subsidiary dedicated to this area of business – Taprobane Wealth Plus Ltd. Going forward, Taprobane plans to capitalise on the favourable environment present for corporate debt activities, especially with the new tax incentives offered for listed corporate bonds and the capital market development initiated by the SEC and the CSE.

The Government of Sri Lanka has also taken several key steps in the right direction to create a more vibrant debt market, which includes relaxation of exchange control regulations permitting foreigners to invest in corporate bonds, unification of withholding tax treatment between Government and corporate bonds, extension of the yield curve with a few long-term bond issues, thereby establishing a benchmark for the market and adoption of a stable monetary policy and managing inflation expectations.

Apart from the current activities, Taprobane Wealth Plus intends to venture into wealth management activities, where its group clientele would truly benefit from their in-depth product and industry knowledge, hands-on approach to business, the strength of the group and the extensive relationships acquired with market players.