Country’s savings giant, National Savings Bank (NSB) bought 13 percent of The Finance Company PLC (TFC) last Friday for a sum of Rs.393 million, becoming another state owned institution that has paid an unusually high price on controversial stocks.
A stock exchange report filed by Taprobane Securities said that its client NSB bought 7, 863, 362 shares, which amounted to 13.02 percent of TFC at an average price of Rs.49.74 per share. However, the sellers of the shares were not mentioned.
Mirror Business on Saturday reported that the sellers of the shares were the two non-executive directors of TFC, Rayynor Silva, who is a popular media personality attached to ABC Corp and the brother of MP Duminda Silva and Dinal Wijemanne, the CEO of Taprobaine Securities, the brokerage which facilitated the deal.
Among the other sellers were two of the top 20 shareholders of the company namely, N. Perera and A.A.Y. Perera, who were featured 13th and 14th places respectively.
Although NSB may claim that the purchase of TFS shares is strategic in creating synergies between the two entities, the analysts Mirror Business talked to charged that the price paid by NSB was not rational.
On the day NSB bought into the TFC, shares of the finance company opened at Rs.30, and during April, the share was trading between Rs.30-32.50.
The Finance made a net loss of Rs.17.5 million for the three months ended December 31, 2011, steeply down from Rs.440.4 million net loss it made in the same period of the previous year.
The financials however also showed that TFC held negative net assets per shares of Rs.23.57 at the end of December and an accumulated loss of Rs.9.4 billion.