CSE approves Rs.1bn debt issue of LOLC’s NBFI sector holding company

The Colombo Stock Exchange (CSE) has given its approval in principle for a proposed Rs.1 billion debenture listing by the fully owned subsidiary of LOLC Group, LOLC Ceylon Holdings (LOCH), to partly fund LOLC Group’s upcoming non-bank financial institution (NBFI) sector share transfer to the firm, making it LOLC’s NBFI sector holding company in Sri Lanka.

The company plans to list one million senior redeemable rated guaranteed debentures on the CSE at a par value of Rs.100 per each.

LOCH plans to utilise the proceeds of the debenture issuance to partly finance the acquisition of LOLC Holding PLC’s equity stake in LOLC Development Finance within one month from thedate of allotment. 

“Proceeds from an equity infusion by the parent, LOLC Holdings PLC shall be used to purchase the shares of LOFC and CLC, subject to receipt of relevant regulatory approvals (as applicable),” the company stated in the debenture prospectus.

Approval in principle from the SEC and no objection from the Central Bank has been obtained for the share transfer. The share transfer is expected to take place immediately upon LOCH becoming a listed entity on the CSE. 

Moving forward, LOCH plans to become a platform to own investment in the non-banking financial institutions of LOLC Group’s Sri Lanka operations. 

Consequently, post restructure LOCH would become the NBFI sector holding company of the LOLC group with plans to attract large scale investors to acquire minority stake in the company.

“Purchasing minority stake in LOCH would seem as an attractive investment opportunity for large scale investors who have a favourable future outlook of NBFI sector. Before such minority stake acquisitions (by third party investors) take place, LOCH shall ensure that such minority stake sales by LOCH shall only be executed, subject to the receipt of relevant regulatory approvals (as applicable). 

LOLC Ceylon Holdings Limited will be regarded as one of the largest NBFI sector holding companies in Sri Lanka in terms of the total asset size,” the company noted. Capital Alliance Partners Limited has been appointed as the manger to the debenture issue.