Tuesday, 2 September 2014 02:15
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Private sector industry giant Commercial Bank has completed the purchase of Indra Finance Ltd., for Rs. 870 million.
The purchase is the entriety of the shares of the finance company amounting to 21.6 million, paying Rs. 40.27 per share.
The acquisition has been approved by the Monetary Board and is part of the Central Bank initiated financial sector consolidation.
The planned acquisition was first announced on 16 July subject to due diligence.
Analysts noted Indra Finance was a good fit for the largest private commercial bank. Some years ago it had a leasing entity (Commercial Leasing) but divested it. Whilst plans on Indra were disclosed, analysts speculated that COMBank could be exploring several more finance companies as part of expansion and in tandem with Central Bank policy towards industry consolidation.
Incidentally, Commercial Bank was the first among the banking league to announce an acquisition under CB’s new policy environment.
The asset base and business volume of Indra is unknown since the entity is not quoted on the Colombo Stock Exchange but industry analysts noted Indra is well managed and had lower liabilities since it wasn’t too focused on deposit mobilisation.
Indra Finance was registered as a finance company by the Central Bank in May 2013. It is part of Indra Group, which is strong on the motor trade and big vehicle financing and leasing portfolio. Its proprietor Indra Silva incidentally is the fourth largest shareholder and the biggest individual shareholder of Commercial Bank with a 5.53% stake as at end March 2014.
Indra Group is also a customer of Commercial Bank whilst Chairman Indra Silva is also a high net worth investor in the stock market with a select blue chip portfolio. Indra also has interests in property development. In the motor business, Indra Traders has 13 main branches, fully-equipped workshops, spare part dealers and 40 exclusive dealers.
