People’s Leasing forays into Bangladesh

By Shehana Dain

Industry giant, People’s Leasing and Finance Plc is foraying into Bangladesh to tap high growth prospects in the booming South Asian country with a near 200-million population.

PLC said it has entered into an agreement with Alliance Leasing and Finance Company of Bangladesh proposing to carry on the finance business under the Financial Institution Act 1993 of Bangladesh,

PLC will acquire 51% of the ordinary shares of the Bangladesh entity for Rs. 1 billion. The Company is yet again on the lookout for foreign financing facilities and aims to secure a syndicated loan in the range of $ 50 to $ 75 million soon.

On the sidelines of the bell ringing ceremony for June at the Colombo Stock Exchange (CSE) to celebrate PLC’s 20 anniversary PLC, CEO D. P Kumarage told the Daily FT yesterday that the company would continually be vigilant on foreign markets and loan prospects looked positive thus far.

 “We have been raising foreign loans and we will continue to do so because we need it for our day-to-day working capital. We have a few proposals from Emirates MND Bank, the same place that we got financing from last time. This time we are looking for sources in Singapore as well. We will keep foreign markets open continually.”

The $ 50 million financing from the Emirates MND Bank was the second foreign facility that PLC successfully secured in 2014. First was a $ 10 million one-year facility which was also entirely financed by Emirates MND Bank. Both exercises were pursued following the support extended by the incumbent Government’s 2013 Budget.

Asked if PLC would revive the shelved five-year international bond to raise $ 150 million any time soon,Kumarage said: “I don’t think we will go ahead with the foreign bonds anytime soon because we have some good offers in terms of loans at the moment. However, if the market dries up, we will look at the bond option.”

PLC’s CEO also said that the company would most probably go for a merger with People’s Merchant Finance (PMF) rather than acquiring 100% of the latter’s shares. Currently People’s Bank and PLC hold 87% of the company while PLC was appointed as the managing agent of PMF in May 2015.

Noting that he expected PLC’s credit portfolio to grow by 10% this year, Kumarage said PLC was cautious regarding the continuous fluctuation in vehicle import tax rates and volatile interest rates; however he was confident that new infrastructure projects kicking off in the country could reduce the adverse impact.

“The increased tax rates will have an impact no doubt, because the market might slow down a little bit, but with the diversification that we have, especially with the number of other subsidiaries under us, we expect to do better this year. The challenges we will face this year will definitely be from the regulators; we have to be very watchful about it. If the domestic market gets active, particularly on the infrastructure side with housing projects and newFDIs, it will have a direct impact on our business. We hope that the economy takes off very soon.”