Asia Asset Finance to raise Rs. 1.5bn via rights issue to strengthen Tier 1 capital

Asia Asset Finance PLC announced a rights issue to raise approximately Rs. 1.5 billion to strengthen its Tier 1 capital and support future business volume expansion. 

The Board of Directors resolved on June 10, 2026, to issue 45,162,012 ordinary voting shares at a consideration of Rs. 33.30 per share. The new shares will be provisionally allotted at a ratio of four new ordinary voting shares for every eleven existing ordinary voting shares held. The rights issue is subject to in-principle approval from the Colombo Stock Exchange for the listing of the shares and approval from the company’s shareholders.

The capital infusion is intended to ensure the company remains compliant with the Central Bank of Sri Lanka’s regulatory requirements while accommodating expected fund utilization over the next two months. Currently, the company’s Tier 1 Capital Adequacy Ratio stands at 24.57 percent as of March 31, 2026, well above the statutory minimum of 8.5 percent. 

This capital raising follows a period of solid balance sheet growth, with the company’s total asset base expanding to Rs. 53.78 billion by the end of the 2025/26 financial year, up from Rs. 37.11 billion in the previous year.

The Muthoot Finance Limited-backed company reported a net profit of Rs. 1.038 billion for the full year ended March 31, 2026, marking a 135.4 percent year-on-year growth compared to the Rs. 441.1 million recorded in the prior financial year. This profitability was driven by an 88.5 percent increase in net interest income to Rs. 4.93 billion. Interest income for the period reached Rs. 9.11 billion, reflecting a 52.6 percent growth supported by continuous expansion in the loan book across segments. Additionally, the company fully utilized a recent Rs. 2 billion debenture issue for its gold loan portfolio.

The finance company also recorded robust improvements in its asset quality metrics. The net non-performing accommodations ratio decreased to 2.37 percent by the end of March 2026, compared to 6.00 percent in the previous year. The gross non-performing accommodations ratio improved to 6.04 percent from 12.53 percent. Following the completion of the proposed rights issue, the stated capital of the company, which currently stands at Rs. 2.20 billion represented by 124,195,533 shares, will increase to support ongoing operations. 

(NF)