Orient Finance gets shareholder nod to raise Rs.400mn via rights issue

The shareholders approved a move by Orient Finance PLC, a Janashakthi group subsidiary, to raise up to Rs.400 million via a rights issue to strengthen its Tier II capital, during an Extraordinary General Meeting (EGM) held yesterday. 
As at September 30, 2016, Janashakthi PLC had an 89.81 percent stake in the company with another 1.62 percent held by Dunamis Capital PLC, another Janashakthi group entity. BG Investments Private Limited held another 3.15 percent stake being the second largest shareholder.   
The proposed rights issue is by way of preference shares redeemable in five years and each existing shareholder will receive one new share at an issue price of Rs.100 a share for every 37 existing ordinary shares held.  
However, the shareholders have the option to subscribe for additional shares or renounce one’s rights in favour of a third party, the company stated.  
As of September 30, 2016, the company had 148 million ordinary shares. 

The company said these preference shares would not be listed on the stock exchange. The proceeds from the rights will be used for lending purposes.  
As of September 30, 2016, Orient Finance had an equity capital base of Rs.2.38 billion.  
The Central Bank this month announced its intentions to increase the minimum Tier I capital of licensed finance companies up to Rs.2.0 billion from the current Rs.400 million. A formal directive to that effect is expected soon.  
Orient Finance has a total asset base of Rs.18.5 billion and a loans and receivable book of Rs.15.5 billion, which grew by little under Rs.2.0 billion during the 1H17. The company earned a net profit of Rs.1.06 a share, 63 percent lower from the same period last year, as the provisions for bad loans and costs surged.