The Colombo stock market has experienced keen interest for the Rs. 8 billion Rights Issue of NDB.
Yesterday, 17.1 million Rights (allotments) were traded between a high of Rs. 2.10 and a low of Rs. 1.60 before closing at the latter level. This was on top of five million traded on Tuesday.
NDB’s Rights Issue involves 106.78 million shares on the basis of 28 new shares for 61 held at Rs. 75 each.
Analysts said that investors were willing to pay a premium in order to qualify for the upcoming Rights reflects their keenness and confidence. Last date for renunciation of Rights is 4 May.
The purpose of the rights issue is to strengthen the bank’s Tier 1 capital base to facilitate its asset book growth.
NDB is also offering 37.67 million new shares (9.9% stake) by way of a private placement at Rs. 85 per share to Norwegian development finance entity Norfund, boosting the Lankan bank’s growth and expertise to empower the private sector. Heralding many firsts and major significance, Norfund, under the deal, will be making its maiden equity investment in Sri Lanka; whilst it will be also the first investment in Asia in 2021. It is also NDB’s first foreign equity placement agreement.
Norfund will subscribe to any unsubscribed rights and also take up the private placement if required at Rs. 82.50 per share, which reflects a 10% premium on the Rights price. In the event the Rights Issue is fully subscribed by existing shareholders, the realisation of Norfund’s commitment would see NDB’s capital being boosted by Rs. 11 billion. This will increase its foreign shareholding percentage to around 21%.
“This investment comes at a time when most of the world is facing external macro-economic challenges, especially due to the global COVID-19 pandemic with rating downgrades etc. In that context, it is extremely heartening to see we have Norway and its Norfund who believe in the resilience of NDB and Sri Lanka,” NDB Chairman Eshana De Silva told the media last month.
NDB is one of the fastest growing and the fourth-largest listed commercial bank, with assets growing by 18.4% in 2020 to Rs. 632.1 billion.
NDB has 11,359 public shareholders with a float of 81%. Major shareholders include Sri Lanka Insurance Corporation funds (11.7%), EPF (10%), BOC (8.3%), Dr. Sena Yaddehige (4.3%), Softlogic Insurance (4%) and ETF (3.8%).