People’s Merchant Finance sells prime property to parent for Rs.1bn

People’s Merchant Finance PLC (PMF), a unit of state-owned People’s Bank, has sold a 108 perch property it owned in Nawam Mawatha, Colombo 2, to its parent for a consideration of Rs.1.04 billion with the approval of the Central Bank. 
PMF said it would utilize the funds to settle the outstanding facilities of People’s Bank as well as to strengthen its core capital in order to comply with the regulatory core capital requirements. 
“Further, the excess money may be utilized for the future expansion of PMF. It may increase the net interest income and profitability of PMF accordingly,” the company said in a stock exchange filing.
The Related Party Transaction Review Committee of PMF is of the view that the transaction is on normal commercial terms and is not prejudicial to the interests of PMF and its minority shareholders.

As a result, the committee is not obtaining an opinion from an independent expert but two independent valuations have been obtained in relation to the value of the property, including a government valuation prior to proceeding with the transaction. 
People’s Bank and its subsidiary People’s Leasing and Finance PLC hold over 87 percent of the issued shares of PMF.