HNB to buy 51% stake in Prime Grameen Micro Finance for Rs. 660m

Tuesday, 5 August 2014 01:31 - - {{hitsCtrl.values.hits}}

Hatton National Bank Plc (HNB) said yesterday it plans to acquire a 51% controlling stake in Prime Grameen Micro Finance Ltd. for Rs. 660 million subject to regulatory approvals and due diligence as well as shareholding agreements. The planned acquisition the HNB said fits well with its business model as the bank is a pioneer in microfinance in Sri Lanka and has been operating through its internationally renowned ‘Gami Pubuduwa’ program for over 25 years. “Considering the opportunity to be part of the upliftment of the rural economy in line with the national vision of Sri Lanka, the Bank was keen to further penetrate in to the untapped market potential in microfinance,” HNB said in a statement. It said subsequent to evaluation of several options the Board of Directors of HNB Plc has decided to acquire a stake of 51% in Prime Grameen Micro Finance Ltd. Prime Grameen Micro Finance Ltd., incorporated in 2000, is a flagship microfinance operator in Sri Lanka which is modelled based on the world famous Grameen concept and is adapted to suit domestic conditions. Over the years, the Prime Grameen has touched the lives of over 450,000 micro enterprises through its microfinance programme. Prime Grameen is currently owned by Prime Lands Ltd., a market leader in real estate development. Over the recent past Prime Grameen has recorded impressive performance with an annual loan growth of 24%, deposit growth of 33% and a return on equity of over 50% for the financial year 2013/14 while maintaining a high quality asset portfolio with a NPA level of below 1%. Commenting on the acquisition, HNB Managing Director and CEO Jonathan Alles said: “HNB’s expertise in serving the microfinance sector for over two-and-a-half decades, coupled with HNB’s strong brand equity, will enable Prime Grameen to accelerate growth while securing funding at attractive rates from local as well as foreign sources. As such, we are confident that the investment in the professionally managed Prime Grameen Micro Finance Ltd. will further strengthen HNB’s commitment as a Group in serving the financial services sector in the country.” Prime Grameen Micro Finance Ltd. Chairman B. Premalal said: “We at Prime Grameen are absolutely delighted to enter into a partnership with HNB drawing up new vistas for the micro finance industry. The once troubled giant Grameen was restructured and resurrected within a period of three years and this partnership will provide the impetus for us to reach greater heights in the finance sector. We look forward to a great future with HNB and make a telling contribution towards the betterment of the national economy.” The proposed acquisition is also in line with the financial sector consolidation plans outlined by the Central Bank of Sri Lanka, under the financial sector road map 2014 and HNB Plc has made an announcement to the CSE in this regard in accordance with the disclosure requirements of the CSE.

Commercial Credit buys Trade Finance and Investments for over Rs. 1.5 b

Jetwing Group and connected parties sellout

Commercial Credit and Finance PLC (CCF) yesterday announced its acquisition of 55, 037,154 ordinary voting shares of Trade Finance and Investments PLC (TFI) at a price of Rs. 28 per share. This represents over 96% of the total outstanding ordinary voting shares of TFI. Commercial Credit and Finance PLC will make the mandatory offer for the remaining shares of TFI at Rs. 28 per share as required by the Company Takeovers and Mergers Code 1995 (as amended), in due course. The stake remaining is only 1.77% and would entail Commercial Credit only a further payment of Rs. 49.56 million. The net asset per share of TFI was Rs. 14 whilst it was one of the well managed small finance companies with Rs. 441 million in retained earnings. Commercial Credit CEO Roshan Egodage said: “Our acquisition of Trade Finance and Investments is in line with our support of the financial sector consolidation program initiated by the Central Bank of Sri Lanka. TFI, which we have acquired at a value of over Rs. 1.5 b, is no doubt one of the best performing companies in Sri Lanka. We’re confident that this acquisition will enhance our overall portfolio and, in the long term, contribute to enhancing our service offering to our thousands of customers across Sri Lanka.” The Central Bank of Sri Lanka has, by letter dated 4 August, confirmed that it has no objection to Commercial Credit and Finance PLC acquiring the shares in Trade Finance and Investments PLC, subject to relevant statutory and regulatory approvals. Commercial Credit has made this share acquisition as a part of the ongoing financial sector consolidation program under the leadership of the Central Bank of Sri Lanka. Sellers of TFI were Jetwing Group and related parties. In a filing to the CSE, the Company said directors N.T.M.S. Cooray, H.R. Peries and W.A.T. Fernando sold their shareholding whilst several companies in which they as well as family members hold directorship had sold too. TFI saw 55.2 million shares traded for Rs. 1.545 billion. The large blocks were done at Rs. 28 whilst the share price hit an intra-day high of Rs. 28.20, up by one rupee from previous close. TFI finished the day at Rs. 28, up by 80 cents. TFI last week rose by Rs. 1.20 to close at Rs. 27.20 whilst it had an intra-week high of Rs. 27.80, which was alsot the 52-week highest share price bettering the previous best of Rs. 26, established in the previous week. In FY14, the Company posted a net profit of Rs. 166 million, up from Rs. 129.6 million. Income was Es. 418 million, as against Rs. 294 million in FY13. It had assets worth Rs. 1.7 billion (of which loans and receivables amounted to Rs. 1.16 billion) and liabilities amounted to Rs. 877 million of which customer deposits amounted to Rs. 778 million. Equity amounted to Rs. 793 million including Rs. 441 million in retained earnings. TFI was incorporated on 5th January 1978 to operate as a private limited finance leasing entity within the group of J.L. Morrison & Sons Ltd. Thereafter, it was converted to an unquoted public company on 15th February 1990. N.G.H.Cooray, the former Chairman of Jetwing Group of Companies, took control of Trade Finance & Investments Ltd in 1990. When he acquired a 93% stake in the company following a sell-down by the shareholders of the company at that time. Subsequently, in 1995, the Cooray family of the Jetwing Group undertook the management of the company and expanded the operation of the business.