People’s Leasing to raise Rs. 6 b via its third debenture issue

By Shehana Dain

People’s Leasing and Finance PLC will raise Rs. 6 billion via its third listed debenture issue commencing tomorrow (5). 

Previous exercises were in September 2014 when it raised Rs. 3 billion and the first one in 2012/13 when it raised Rs. 6 billion.

PLC is offering 60 million Rated, Senior, Unsecured and Redeemable Debentures at Rs. 100 each. This is on the basis of an initial issue of 40 million debentures and the option to offer a further 20 million in the event of the original figure being oversubscribed. The issue will close on 26 November.

The issue has two types of debentures; Type A is a four year tenor and carries 9.60 % interest rate per annum payable semi annually with an Annual Effective Rate (AER) of 9.8304%. Type B is five years and carries 9.95% interest rate per annum payable annually with an AER of 9.95%

The Issue has been Rated AA- (lka) by Fitch Ratings whereas the company has a rating of B+/AA- (lka).

PLC proposes to utilise the proceeds of the Issue within six months from the date of allotment for working capital purposes of the firm that is disbursement of leasing and other loan facilities.

The company also wishes to gain access to additional source of funds from non-deposit source, which will open up capital market funding (public listed) for PLC and tap a wider investor base with an appetite for innovative financing and risk profile.

Furthermore minimising the interest rate risk and the gap exposure in PLC’s assets and liabilities portfolio and facilitate future expansion of operations and the asset base is another objective the management requires to carry out. The funds raised through the issue are to be allocated proportionately to expand the asset base dispensing 64 % for lease and 36 % for loan.

Finally, PLC will look into mobilising and raising medium term funds to match the medium to long term lending of PLC and to minimise the mismatch in funding exposure.

As at end of first half of FY15 PLC’s assets were Rs. 116 billion of which Rs. 103 billion were loans and receivables. The Group’s net interest income from lease and higher purchases was down to Rs. 6.5 billion from Rs. 7.6 billion for the period. Profit after tax was up to Rs. 2.26 billion as at September from Rs. 1.75 billion previous year.