Proposed US $ 50mn ADB investment to fuel new chapter of growth for HNB

Hatton National Bank PLC (HNB) recently announced that its board of directors has granted the Asian Development Bank (ADB) approval to purchase a substantial equity stake in the bank by way of a fresh issue of shares. 
Upon securing the regulatory approval and shareholder consent at an Extraordinary General Meeting (EGM), the bank will issue new ordinary voting shares worth US $ 50 million, thereby enabling the ADB take up to 9.9 percent equity stake in the bank with the valuation of each share being based on the 30-day average trading price immediately preceding the EGM but restricted to a price band between Rs.190 – Rs.220.
Already a premier banker serving the total needs of the nation, HNB’s breakthrough partnership with the ADB is anticipated to open up new business opportunities across multiple areas including SME, microfinance, project finance and renewable energy. 
Fuelled by this fresh infusion of capital and guided by the ADB’s own extensive technical expertise, HNB aims to further strengthen its systems and processes. As recently outlined by HNB MD/CEO Jonathan Alles, HNB is on its way on an extensive digital transformation journey. The technical assistance that would be available through this strategic investment will power a complete  transformational process within the organisation in order to further augment HNB’s position in the digital space. HNB will also be in a position to harness technical expertise to further refine its stringent risk management framework and drive continuous process improvement. 
The ADB will also provide HNB with access to a wealth of knowledge on world-class governance standards, corporate social responsibility and sustainable banking practices which HNB aims to integrate into its own business model, risk management framework and governance practices going forward.  
Additionally, the capital infusion will support HNB, as it moves towards implementation of more stringent capital adequacy requirements stipulated under the BASEL III regulatory framework. The ADB’s investment in HNB will serve to provide a sizable capital buffer and position HNB as one of the best capitalized commercial banks in Sri Lanka.  
This landmark partnership with the ADB is also anticipated to significantly raise the profile of HNB on the global stage, potentially opening up new avenues for the bank to raise funding from international sources at attractive rates and long tenors, an area in which HNB has already demonstrated prolific success, most recently in relation to the raising of US $ 185 million from multilateral financial institutions including US $ 100 million from the ADB.
Furthermore, this strategic partnership will also widen the horizons for inorganic growth for HNB beyond the shores of Sri Lanka and the new investment to be made by the ADB would ultimately deliver enhanced value to all the stakeholder of HNB.
The ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, the ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members – 48 from the region. In 2015, the ADB assistance totalled US $ 27.2 billion, including co-financing of US $ 10.7 billion.