Thursday, 2 October 2014 00:30
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Associated Motor Finance buys 41% of Arpico Finance for Rs. 501 m; triggers Takeovers Code at Rs. 166 per share
In what could regarded as a merger of the oldies, the Associated Motor Finance Company Plc (AMF) yesterday bought a 40.6% stake in Arpico Finance Company Plc for Rs. 501 million under the Central Bank-initiated financial sector consolidation program.
AMF paid Rs. 166 per share for the stake amounting to 3.018 million shares. Prior to yesterday’s purchase AMF held 55,000 shares, hence the full stake is 41.33%
The seller was Alfinco Insurance Brokers Ltd., which is part of the Alliance Group including Alliance Finance Co Plc.
As a precursor to yesterday’s deal, the Arpico Finance Board last week decided to accept the offer made by Alfinco Insurance Brokers Ltd. to repurchase shares held by Aprico Finance Plc in Alfino Insurance Brokers for Rs. 186 million. This value was independently arrived at by KPMG as being the fair value whilst the transaction had got regulatory approvals as well.
With yesterday’s acquisition, AMF triggered the SEC Takeovers and Mergers Code and has announced a mandatory offer to buy the remaining shareholding in Aprico Finance.
The balance stake is 4.364 million shares and if accepted in its entirety the cost will be Rs. 725 million.
Alliance Finance has agreed to accept the offer in respect of 1.453 million shares amounting to 19.5% stake to facilitate the AMF in compliance with the CB’s financial sector consolidation plan.
Dawi Investment Trust holds 10% whilst Dhammika Perera owns 4%. Related parties to Alliance Finance also hold additional small stakes. Arpico Finance’s public holding is 39%.
Though reporting a loss in the June quarter in FY14, Arpico Finance posted a Rs. 100 million profit, up by 102% over the previous year. Net operating income grew by 14% to Rs. 442 million. The net asset per share of Arpico is Rs. 91.41 as at 30 June 2014, down from Rs. 129.73 end FY14. Its highest traded price in June quarter was Rs. 96 and closing price was Rs. 95.
It has Rs. 3.3 billion in deposits out of Rs. 4.35 billion in liabilities whilst assets amounted to Rs. 5 billion, of which Rs. 2.84 billion is lease rental receivables. Shareholders’ funds were Rs. 680 million inclusive of Rs. 185 million in revenue reserves and Rs. 250 million in other reserves.
AMF has assets worth Rs. 2.75 billion (of which Rs. 1.6 billion were loans and advances) and its net asset per share is Rs. 151 as at 30 June 2014, up from Rs. 144 in end FY14. Its liabilities were Rs. 1.9 billion inclusive of Rs. 1.5 billion in deposits. Shareholders’ funds amounted to Rs. 846.6 million including Rs. 733 million in retained earnings.
Imperial Import and Exports Ltd. holds a 43% stake in AMF whilst Director J.P.I.N. Dayawansa holds 42.7%. The public float of AMF is only 9.9%.
Arpico Finance and AMF are considered as two of Sri Lanka’s oldest financial institutions. Sources said the two have joined hands to harness the economic development in the country while enhancing the shareholder and stakeholder value of the respective institutions.
Both these institutions were established more than 50 years ago by two great visionary business leaders in the country, and today Associated Motor Finance Company PLC under the leadership of Dr. L.R. Karunarathna as Chairman, J.P.I. Nalatha Dayawansa as Managing Director and T.M.A. Sallay as CEO and Arpico Finance Company PLC under the leadership of Bri Ponnambalam as Chairman and Hafeez Rajudin as Managing Director/CEO and are forging ahead to be in the forefront.
Associated Motor Finance Company PLC was established in 1962 by founder Chairman, the late J.P.I. Piyadasa, and is the fifth oldest finance company in the country and created to provide finance facilities for his own products. He was the sole proprietor of Imperial Car Sales and Imperial Motor Stores and also the dealer for Austin, Morris, Ford and Fiat vehicles.
Arpico Finance Company PLC, established in 1951 by the founder Chairman, the late Hendry Albert Richard Pieris, is the second oldest finance company in Sri Lanka and created with the objective of providing finance facilities for their own products. He was the Managing Director of Richard Pieris & Co Ltd., which was the sole agent for Ford vehicles to Ceylon.
“This partnership creates a heritage of over 115 years that cannot be emulated and builds a partnership that will be a catalyst in the transformation of the finance company segment in the country meeting the aspirations of the people,” sources said.
This landmark partnership was facilitated by Ernst & Young with the active participation of the major shareholders of the two companies over several months.
