LB Finance acquires 65% stake in loss-making Multi Finance for Rs. 400 million – The Island
By Hiran H. Senewiratne
Industry giant LB Finance PLC recently acquired a 65% stake in Multi Finance PLC at Rs. 400 million, according to market analysts.
He bought 41.11 million shares or a 64.62% stake, with 28.78 million shares bought at Rs. 9.70 each and 12.32 million shares bought at Rs. 9.80 each. The net asset value per share of Multi Finance is Rs. 7.12.
LB Finance will make a mandatory offer under the SEC Takeovers and Mergers Code. Multi Finance has a public float of 35 percent with 904 shareholders.
The acquisition is part of Central Bank-facilitated consolidation within the non-banking financial institutions (NBFIs) sector, market sources said.
The transaction was structured and executed by Acuity Stockbrokers.
Multi Finance as of December 31, 2021 held assets worth Rs. 773.2 million, while liabilities were Rs. 320 million. It was carrying an accumulated loss of Rs. 462 million.
Amid these developments, stock market activity yesterday was mildly positive as the Sri Lankan government signed an agreement with the State Bank of India for a US$1 billion line of credit for food and drugs, while President Gotabaya Rajapaka’s recent address to the nation also gave stock market investors some boost, brokers said.
However, the absence of viable debt facilities and the shortage of essential items along with the acute financial crisis will aggravate the problems in the future, equity analysts said.
Both indices rose. The All-Share Price Index rose 153 points and S and P SL20 rose 64.05 points. The turnover amounted to Rs 1.4 billion without a single pass.
In the retail market, the top seven companies which mainly contributed to the turnover were Expolanka Holdings Rs 323 million (1.25 million shares traded), Browns Investments Rs 188 million (17.4 million shares traded ), LOLC Finance Rs 96.3 million (5.7 million shares traded), Dialog Rs 79.6 million (6.9 million shares traded), LOLC Holdings Rs 68.8 million (86,000 shares traded) , Hayleys PLc Rs 62.4 million (628,000 shares traded) and Commercial Bank Rs 59.7 million (769,000 shares traded). During the day, 72 million volumes of shares changed hands in 18,000 transactions.
Hayleys PLC is preparing to raise Rs 5.0bn of debt through a debenture issue, but the exact targets are not immediately clear, although the group has significant debt, some of which may need to be refinanced, according to market sources. noted.
Hayleys, one of the most diversified conglomerates in the country, performed extremely well for the year ended March 2021 and for the nine months ended December 2021, as its subsidiaries generated strong performances, in particular those which generated export revenue, which resulted in higher dividend income for the holding company.
The Sri Lankan rupee was trading around 270/290 to the US dollar yesterday, market participants said, as bond markets were inactive ahead of the weekend.
Although there were offers, the offers were not firm, the dealers said. A narrow quote for small volumes was 275/285 to the US dollar.