DFCC buys 10% NTB stake for Rs. 1.3 b

Friday, 2 December 2011 00:00 - - {{hitsCtrl.values.hits}}

Move as part of boosting portfolio investment, earmarking medium-term capital appreciation
Indra Silva exits booking profit

Pioneering development finance institution, DFCC Bank yesterday bought a 10% stake in Nations Trust Bank for Rs. 1.3 billion as part of shoring up its portfolio investment, earning medium-term capital gain.

The block amounting to 22.9 million shares was done at Rs. 57.80 each. The seller was Indra Silva, who has been accumulating the shareholding over a long period. Analysts said Silva is likely to have booked considerable profit from the sale. The deal was brokered by Acuity Stockbrokers, which handled both seller and the buyer.

DFCC also has a 15% stake in the country’s biggest private sector bank, Commercial, and analysts said the former was looking for a large block of value stock.

NTB is controlled by premier blue chip JKH (30% Group stake) and Central Finance (20% Group stake) and are expected to sell down to conform with Central Bank directives concerning shareholding in commercial banks.

Following the part shedding of its stake in Commercial Bank in June, DFCC was sitting on a large pool of capital gains. It enjoyed a one-off profit of Rs. 3.7 billion from the sale of a 10% stake in Commercial Bank for Rs. 5.8 billion.

As at September 2011, DFCC had a portfolio of Rs. 3.6 billion investment in ordinary shares (market value of its investment in quoted ordinary shares is Rs. 14.7 billion), whilst it had Rs. 11.5 billion in other reserves in addition to Rs. 3.1 billion retained earnings at company level.

DFCC’s share price yesterday closed unchanged at Rs. 112, whilst NTB moved up 2.10 to Rs. 58.