Representatives of the syndicated loan agreement from Europe with LOLC Group Deputy Chairman Ishara Nanayakkara (fifth from right) after inking the agreement
The LOLC group has attracted US $ 247 million in funding for three of its subsidiaries through the largest ever syndicated loan for the Sri Lankan non-banking financial sector so far. “This is the largest facility given to a non-banking financial institution (NBFI) in Sri Lanka and the first time that the Middle Eastern (ME) banks have contributed to a syndicated loan to NBFIs in Sri Lanka,” LOLC Group Managing Director Kapila Jayawardena said at the loan signing ceremony yesterday.
Commercial Leasing and Finance PLC attracted a US $ 153.1 million loan through the Dutch development bank FMO, which lent US $ 39.2 million directly, and acted as the lead arranger and facility agent for the rest of the funds attracted from 11 leading banks and funds based in Europe. LOLC Finance PLC received a US $ 69 million loan, which was broken down to a sevenyear US $ 30 million loan by the Asian Development Bank (ADB), and a three-year US $ 39 million syndicated loan from five leading banks in the Middle East.
LOLC Micro Credit Limited received a US $ 25 million loan from the ADB as well. “These are vibrant and well-thought-out contributions of groups like LOLC to help the country,” Central Bank Governor Arjuna Mahendran said. He noted that it was also the responsibility of such companies to help change the mindsets of a considerable portion of the public, who think that all foreign loans are conspiracies to steal the resources of Sri Lanka.
Mahendran added that it was refreshing to see funding inflows to micro credit operations, which had not been given the due attention in the past. “We salute LOLC in getting foreign funding, which will ensure the small and medium sector—the micro borrowing sector—is financed, because it keeps the economy ticking (since) 72-73 percent is in small and medium enterprises and the informal sector,” Finance Minister Ravi Karunanayake added.
The credit facility for Commercial Leasing and Finance will also be bundled with technical assistance from the syndication partners. “The technical assistance includes capacity building in the area of asset and liability management, environmental, social and governance standards, client protection principles and a management development programme focused on leadership and skill training for employees,” Jayawardena said.
He added that the ADB would also provide assistance on developing mobile banking and environmental and social management systems for LOLC Finance and LOLC Micro Credit. Jayawardena said that the intricate web of foreign relationships LOLC had created since inception made the borrowings possible.
“I hope to see our group harness our strengths and further promote our vision, especially in the micro and SME sectors (for) inclusive, sustainable growth and flourishing prosperity for all Sri Lankans,” he added. Ishara Traders Chairman Rajah Nanayakkara is the Chairman of the LOLC group, owning 36.3 percent of the shares in the parent Lanka Orix Leasing Company PLC, while his son and Deputy Chairman Ishara Nanayakkara owns 12.6 percent. Japan’s Orix Corporation owns 30 percent of the shares.