Softlogic Capital to obtain majority shares of Abans Finance for Rs.995mn

 

Yesterday, Softlogic Capital PLC, the diversified Softlogic Holdings PLC's financial sector holding firm, said it had agreed to buy Abans Finance PLC's majority stake in a transaction of Rs.995 million from Abans PLC. Abans PLC owns 33 million shares in Abans Finance PLC or 49.67 percent.

In terms of the 1995 Takeovers and Mergers Code as amended in 2003, Softlogic Capital said it would pay Rs.30.10 per share and declare a mandatory offer to Abans Finance's minority shareholders. As of the end of June 2020, Abans Finance had an asset base of Rs.8.5 billion and a deposit base of a little over Rs.5 billion. The net asset per share of the business was Rs.24.08. Yesterday, Abans Finance shares closed at Rs.29, up Rs.8.50, or 41.46 percent.

In a media release, Abans PLC said it is divesting its interest in Abans Finance with a capital gain from Softlogic Capital. The selling price at which the mandatory bid will declare represents a 47 percent premium to the recently traded price of Rs.20.50.

Meanwhile, shortly after completing the mandatory bid, Softlogic Capital said that Abans Finance would merge with Softlogic Finance PLC. Softlogic Capital has a 72.94 percent shareholding, with the surviving company being Softlogic Finance. Softlogic Capital also said minority shareholders of Abans Finance PLC do not accept the mandatory offer grants 11 Softlogic Finance shares for every six shares held following the amalgamation by Abans Finance PLC.

"As per the most recent issued quarterly financial statement as of June 30, 2020, this ratio determined based on the corresponding net asset values of the two firms," Softlogic Capital said in a stock market filing. The accord is subject to governing approval by the Sri Lankan Central Bank, the Commission on Securities and Exchanges, and the Colombo Stock Exchange.

OSL Take: The latest report launched by the Central Bank of Sri Lanka highlights a crucial area of focus in the next five years. The announcement that it would create investments worth Rs. Thirty billion within the next five years is a positive sign for foreign businesses/investors exploring business/investment opportunities in Sri Lanka. They could start exploring investment opportunities in the biodiversity restoration and management sector and even present to the government of Sri Lanka projects that could implement under the program.

Sri Lanka's economic policies and the continuously improving ease of doing business environment have helped promote the country as an ideal business/investment destination in the South Asian region. Therefore, the proposed issuance of the bond would offer a perfect investment opportunity for the discerning investor.

The call by the Central Bank of Sri Lanka for private investment banks has opened up an investment opportunity for foreign businesses/investors. Sri Lanka's economic indicators show the country is heading in the right development path, and the government's development agenda would also help in this aspect. Therefore, foreign businesses/investors could invest in Sri Lanka without having any doubts. The move by the Colombo Stock Exchange and the South Pacific Stock Exchange to reach a deal to collaborate on market development would serve as a confidence booster for foreign businesses/investors to invest in Sri Lankan stocks.

 VBS/AT/23102020/Z_TB1