HNB Finance acquires 87% stake of Prime Finance for Rs. 2.1 b

Share sale and purchase agreement between HNB Finance and Prime Lands for the purchase of Prime Finance’s shares. From left: Prime Finance Non-Independent Non-Executive Director Anura Pathirage, HNB Finance COO W.S.P. Arangala, Prime Finance Chairman/Independent Non-Executive Director Mangala Goonatilleke, HNB Finance MD/CEO Chaminda Prabhath, Prime Finance Group Chairman/Non-Independent Non-Executive Director Brahmanage Premalal, HNB Finance Chairman Dilshan Rodrigo, HNB Finance Non-Independent Non-Executive Director Rajive Dissanayake, Prime Finance Independent Non-Executive Director Crysanthi Thambiah, and Prime Finance Executive Director Sandamini Perera

HNB Finance Chairman Dilshan Rodrigo (left) and MD/CEO Chaminda Prabhath

• Acuity Stockbrokers handles the transaction done at premium to market; Prime Finance share price closes up 13.5% 

HNB Finance PLC is set to buy a 87% stake of Prime Finance PLC for Rs. 2.1 billion in a deal worth Rs. 20.10 per share, inclusive of a mandatory offer to remaining shareholders. 

The deal was at a premium to the market as Prime Finance closed on Friday at Rs. 17 per share.  Net asset per share as at 30 September 2021 was Rs. 19.26, up from Rs. 18.71 as at end FY21.

Acuity Stockbrokers was the broker to the deal done via a crossing. Post announcement Prime Finance gained yesterday to close at Rs. 19.30, up by Rs. 2.30 or 13.5% from Friday. Overall 106.8 million Prime Finance changed hands via 450 trades for Rs. 2.145 billion.

Public float of Prime Finance was 11.86% as at 30 September with 943 shareholders. The stock finished the September quarter at the highest price of Rs. 16.50 and a lowest of Rs. 10 before closing aty Rs. 14.30.

HNB Finance, in a statement, said that, extending its dominant position in the financial industry, it had entered into a contractual agreement with Prime Lands and Prime Finance on 20 December, acquiring a controlling stake of 87.27% from Prime Lands Ltd., a pioneering force in Sri Lanka’s real estate landscape. 

“This marks a first under CBSL’s recent consolidation plan for the sector, where two key players in the country’s financial industry partner to give rise to a powerful synergy, providing impetus to a diverse product and service offering,” HNB Finance said.

“This merger brings together an exciting combination that will create value for our stakeholders, our employees, our customers and communities. This partnership will strengthen HNB Finance’s relationship with Prime Group and expedite its foray into real estate financing. We are enthused by the prospects for synergies not only in terms of product and reach but also the opportunity to bring a talented and dynamic team into our fold, which will no doubt accelerate our plans for national expansion,” Chairman Dilshan Rodrigo said. 

HNB Finance’s existing and future customers can expect to benefit from an enhanced portfolio, efficient and easily accessible services through a combined branch network, a strengthened balance sheet and better distribution of risk with the addition of Prime Finance’s 93% asset-backed loan portfolio. 

“We are pleased to invite the experienced and passionate Prime Finance team into our midst and are excited by the enhanced potential to create value for customers in new ways, by leveraging the synergy arising from this union. Building on our significant market share, momentum, and the business strength of our powerful parent company HNB PLC, this newfound partnership with Prime Finance reinforces our position as an industry leader and creates a robust foundation for efficiency, growth and improved financial performance. Prime Finance’s expertise and indelible reputation within the sector combined with our strengths, positions us well to further our vision of adding value to the lives of all Sri Lankans,” HNB Finance Managing Director and Chief Executive Officer Chaminda Prabhath said.

Proving its mettle as a player to be reckoned with, the company has won many local and international accolades. HNB Finance was twice ranked among Asia’s Best Workplaces and clinched numerous awards owing to its superlative marketing approach. The company was also recognised for the many CSR initiatives implemented to support the nation. Today, HNB Finance has gained significant market share and has established itself as a trusted and respected finance company. Hatton National Bank’s financial and business strength and stability places HNB Finance at an advantageous position to pursue greater heights.