Sanasa Development Bank PLC (SDB) last week raised equity capital to the tune of Rs.510.65 million from the International Finance Corporation (IFC), the private sector investment arm of the World Bank, a disclosure filed with the Colombo Stock Exchange said.
The bank issued 3,647,500 million ordinary voting shares or a 6.47 percent stake at Rs.140 a share, bringing the total stake held by the IFC up to 8.86 percent of the bank. But the share issue is subject to shareholder approval at a general meeting, the company said.
These funds are part of a broader set of funding arrangement planned by SDB, the microfinancier-turned licensed commercial bank.
SDB, in December 2016, announced it was planning to raise fresh capital up to Rs.3.3 billion through a combination of private placement of shares, convertible loan facilities and a senior term loan involving a couple of foreign parties mainly to meet the minimum capital requirements set out by the Central Bank and also to fund its loan book.
In 2015, the bank obtained the advisory services from the IFC to assist them in technical processes and internal restructuring in their shift toward SME banking. SDB had a core capital base of Rs.5.1 billion by end-September 2016 but the minimum capital requirement for a licensed commercial bank is Rs.10 billion.
The bank’s Tier II capital adequacy ratio stood at 11.71 percent, little above the regulatory minimum of 10.0 percent.
Besides the shares issued to the IFC last week, the bank further plans to issue 4.7 million shares or a 8.95 percent stake to SBI-FMO—a joint venture between Japan’s SBI Holdings Inc. (SBI) and the Netherlands Development Finance Company (FMO) for Rs.658.17 million.
A further 2.09 million shares or a 3.98 percent stake will be issued to FMO for Rs.292.52 million.
FMO and SBI-FMO will also be issued convertible term loans valued at Rs.292.54 million and Rs.658.17 million, respectively, convertible at the end of the loan tenures.
The convertible term loans will be considered as Tier II capital, subjected to the Central Bank approval.
Upon conversion, FMO’s total shareholding in SDB, following the private placement of shares and the conversion of the term loan, will be 7.05 percent, while SBI-FMO will own 15.86 percent.
SDB has also entered into an agreement with FMO to raise US $ 6 million or Rs.892.35 million through a senior term loan facility.
High-net-worth investor, Dr. T. Senthilverl, held 12.77 percent of SDB while Global Rubber Industries (Pvt.) Ltd held a 10.47 percent stake in the bank as of September 30, 2016.