Dialog Axiata PLC, Sri Lanka’s premier connectivity provider, on Tuesday showed clear intentions of becoming a major player in the country’s finance space with the acquisition of a listed finance company, as the dividing line between technology and finance gets blurred by the day.
Accordingly, Dialog yesterday announced the acquisition of a 80.34 percent stake or 37.4 million shares in Colombo Trust Finance PLC (CTF), formerly known as Capital Alliance Finance PLC, from Cargills Bank Limited for a little over Rs.1 billion, paying Rs.28.70 a share. The transaction was carried out in a crossing on the Colombo Stock Exchange. Dialog said it received the Monetary Board approval for the deal and will proceed to announce a mandatory offer to the remaining shareholders of CTF in accordance with the Takeovers and Mergers Code of the Securities and Exchange Commission.
As at June 30, 2017, CTF’s book value per share stood at Rs.9.66 and had an asset base of about Rs.1.3 billion. The CTF share has been trading on the Colombo bourse at Rs.15-16.50 levels. For the year ended March 31, 2017, CTF made a net profit of Rs.4.7 million against a Rs.3.1 million net loss a year ago.
“The acquisition of CTF by Dialog Axiata PLC will facilitate the expansion of the scope of operations of the Dialog group into the sphere of mainstream digital financial services.
Dialog aims to bring together the realms of advanced digital connectivity and cutting-edge financial technology (fintech) to deliver a revolutionary suite of products and services, which will expand the vistas of financial inclusion in Sri Lanka.
Significant within the envisaged inclusion drive, will be a focus on financing solutions aimed at increasing the affordability and accelerating the adoption of digital devices and services by a wide spectrum of consumers and businesses,” Dialog said in a statement.
Dialog Axiata entered the sphere of financial services in 2012 when it was licensed by the Central Bank of Sri Lanka to operate the country’s first mobile payment service eZ Cash. This was an innovation that should ideally have come from the country’s banking sector. Now in its fifth year of operation, eZ Cash has over the years secured over 2.8 billion mobile payment subscribers from across Etisalat, Hutch and Dialog mobile networks. Dialog also operates the Touch contactless transport payment service under licence by the Central Bank of Sri Lanka. Dialog’s latest acquisition CTF, will be operated alongside the digital services portfolio of the Dialog group.
Other digital ventures of the Dialog group include e-commerce portal WoW.lk operated by Digital Commerce Lanka, Doc.lk operated by Digital Health (Pvt.) Ltd and the country’s leading digital education service Guru.lk operated by Headstart (Pvt.) Ltd.
“Dialog envisages that its foray into financial services would help accelerate Sri Lanka’s drive towards adoption of digital financial services by encouraging digital savings and increasing access to financial services for all segments of society.
Dialog would also leverage this acquisition to drive down the entry barriers for adoption of smart technology and devices through inclusive financing solutions,” Dialog Group CEO/Director Supun Weerasinghe said.
NDB Investment Bank acted as financial advisors to the acquisition, while FJ & G de Saram acted as legal advisors to the transaction.