Softlogic Finance rights oversubscribed with strong investor interest
Friday, 27 March 2015 00:00
In a resounding endorsement of Softlogic Finance PLC and its business strategy, the recent Rights Issue of the company was over-subscribed by over 150% with the new equity infusion of Rs. 401 million, boosting the Total Equity position of the company to Rs. 1.9 billion.
The Rights Issue, in which 10 Ordinary Shares were issued at Rs. 30 per share for every 28 Ordinary Shares held by shareholders as at 26 February, attracted applications for over 20.1 million shares – with over-subscriptions exceeding 6.7 million shares. Applications for 13,376,411 shares at Rs. 30 each were accepted by the company and applications were closed on 16 March.
In addition to expanding the capital base of Softlogic Finance PLC the Equity infusion is required to facilitate the high growth trajectory of the company, that has seen its Total Assets increase to Rs. 20 billion, an increase of over 10 times within 4½ years, compared to an Asset position of Rs. 1.8 billion when the Softlogic Group acquired the company. The issue is expected to enhance the capital structure and facilitate the aggressive business plans of the company.
The capital infusion comes at an opportune time with demand for credit by the private sector showing notable increases on the back of reduction of interest rates to multi-year lows, the company said. “Softlogic Finance PLC is greatly pleased at the resounding demonstration of confidence in the company and endorsement of its strategy, by both existing shareholders as well as new investors, especially at a time of bearish sentiment in the stock market,” Softlogic Finance PLC Chairman Ashok Pathirage said. “The capital infusion will add significant further impetus to Softlogic Finance’s journey to achieving its vision of becoming the preferred non-banking financial institution in Sri Lanka.”
Based on the most recent financials of 31 December 2014, the company’s Total Assets grew by 23%, whilst Loan Advances increased by 21% to reach Rs. 14.3 billion. Customer Deposits saw a major increase, growing to Rs. 11.7 billion whilst recording a substantial increase of 54% compared with the previous year.
Similar to other industry players, the company was impacted by fairly severe impairment related to its Leasing and Hire Purchase (HP) portfolio that saw Profit After Tax (PAT) for the nine months subsiding to Rs. 153 million, which was yet an increase of 38% compared to the previous year. Net interest income increased 23% to Rs. 1.1 billion and Total Income rose by 32% to Rs. 1.4 billion. The company has executed a timely change with regard to its lending strategy that has seen a good response during the period.
Softlogic Finance PLC – is part of the Softlogic Group that has interests in healthcare, retail, financial services, ICT, leisure, automobiles and restaurants. The company is a Registered Finance Company under Finance Business Act No 42 of 2011, as well as being a Specialised Leasing Company, licensed by the Central Bank of Sri Lanka under the Finance Leasing Act No. 56 of 2000. The principle lines of businesses include leasing and hire purchase, fixed deposits and savings, personal loans, business loans, gold loans and SME loans. The company has entered into ground breaking alliances with top notch foreign Development Finance Institutions (DFIs) including FMO (Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.- Netherlands), and GuarantCo (United Kingdom).