SDB to raise more capital with issue of 88 m shares via Secondary Public Offering

SANASA Development Bank (SDB) has announced a fresh capital raising via a Secondary Public Offering (SPO) of 88 million shares. 

The new move follows the first phase of its capital raising exercise in FY2020 via a Rs. 1.5 billion Rights Issue in November 2020.

SDB said its Board of Directors at its meeting yesterday resolved to raise further capital through issuance of 88 million new ordinary voting shares via a SPO.

The SPO under consideration constitutes of an invitation to the public by way of a prospectus to subscribe up to 68 million shares, and in the event of an oversubscription of the initial issue, to offer a further 20 million shares.

The issue price is to be determined three market days prior to the date of the Extraordinary General Meeting (price determination date) based on the one-month volume weighted average price (VWAP) of SDB share as at such date.

As required by the Companies Act No. 7 of 2007, the SDB Board also resolved that in its opinion, the price at which the new ordinary voting shares to be issued via SPO, i.e. one-month VWAP for the period ending on the price determination date, would be fair and reasonable to the bank and all its existing shareholders. 

Funds raised will be utilised to further strengthen the equity base of SDB and thereby improve the capital adequacy ratios in line with BASEL III guidelines of the Central Bank and to part finance the growth in the loan portfolio envisaged during FY21 to FY22.

As at 31 December 2020, SDB had loans and receivables to other customers worth Rs. 102.6 billion, up from Rs. 85.8 billion in 2019.

SDB said considering the expected size of the SPO, the Board shall reserve the right to allow new shares under a preferential basis to identified investor/s and to the existing shareholders in consultation with the Colombo Stock Exchange.

The issue of shares via SPO is subject to the shareholding restrictions in the Banking Act, CSE approving in principle and shareholder approval at an EGM.

As at 31 December 2020, the public shareholding of SDB was 85.65%, held by 38,846 shareholders. Senthilverl Holdings is the largest shareholder of SDB with a 12.8% stake, followed by Ayenka Holdings 12.4%, FMO – the Dutch development bank 10%, and IFC 6%.

The current stated capital of SDB is Rs. 7.7 billion represented by 91.57 million ordinary voting shares.

SDB share yesterday closed at Rs. 56.20, down by 80 cents. In 2020, it closed at Rs. 58.10 after touching a high of Rs. 65 and a low of Rs. 50.50. Net asset value per share was Rs. 108, down 21% from 2019.

In February this year, SDB announced it is committed to a $ 40 million loan from the US International Development Finance Corporation, the arm of the US Government Development Bank, subject to regulatory approval. Together, they aim to support small and medium enterprises and women entrepreneurs to support private sector investment and economic growth in Sri Lanka.