HNB Finance strikes Rs.2.1bn deal to acquire Prime Finance

Share sale and purchase agreement between HNB Finance and Prime Lands for purchase of Prime Finance’s shares (from left) Prime Finance Non-Independent Non-Executive Director Anura Pathirage, HNB Finance COO W.S.P. Arangala, Prime Finance Chairman/Independent Non-Executive Director Mangala Goonatilleke, HNB Finance MD/CEO Chaminda Prabhath, Prime Finance Group Chairman/Non-Independent Non-Executive Director Brahmanage Premalal, HNB Finance Chairman  Dilshan Rodrigo, HNB Finance Non-Independent Non-Executive Director Rajive Dissanayake, Prime Finance Independent Non-Executive Director Crysanthi Thambiah and Prime Finance Executive Director Sandamini Perera

• Following completion of deal, two entities to merge and HNB Finance to be remaining entity

HNB Finance PLC, a unit of the Hatton National Banking group, yesterday entered into a trade to acquire the controlling stake of Prime Finance PLC from Prime Lands Private Limited, in a Rs.2.1 billion deal.

Accordingly, Prime Lands will divest its entire stake of 87.27 percent or little over 105.6 million shares of Prime Finance to HNB Finance, at Rs.20.17 per share. 

The net assets per share of Prime Finance, as at September 30, 2021, were Rs.19.26. A filing by HNB Finance said the date of the settlement of the trade would be on December 23, 2021.

HNB Finance also said it would announce the obligatory mandatory offer to the remaining shareholders of Prime Finance, as per the Company Takeovers and Mergers Code, to acquire the shares of minority shareholders.

Subsequent to the mandatory offer, HNB Finance will amalgamate with Prime Finance, with HNB Finance being the amalgamated entity, in line with the non-bank financial sector consolidation plan of the Central Bank.

“The Central Bank of Sri Lanka has granted its approval for the acquisition and approval in principle for such amalgamation,” HNB Finance said in its filing.

Subsequent to the mandatory offer, HNB Finance will amalgamate with Prime Finance, with HNB Finance being the amalgamated entity, in line with the non-bank financial sector consolidation plan of the Central Bank.
“The Central Bank of Sri Lanka has granted its approval for the acquisition and approval in principle for such amalgamation,” HNB Finance said in its filing.

As at September 30, 2021, Prime Finance had an asset base of little over Rs.6.5 billion and a loan book and deposit base of Rs.3 billion each.

Prime Finance was previously known as Summit Finance and before that as George Steauart Finance.
“This partnership will strengthen HNB Finance’s relationship with Prime Group and expedite its foray into real estate financing,” a press release issued by HNB Finance said. This was not the first time the HNB group went and bought a finance company belonging to Prime Lands Group. In 2014, Hatton National Bank PLC bought a 51 percent stake of what was then known as Prime Grameen Microfinance Limited from Prime Lands Group and renamed it as HNB Grameen Limited. Then in 2018, HNB Grameen Limited was renamed as HNB Finance Ltd. Prime Lands still has a 38 percent stake in HNB Finance PLC.