LOLC confirms $ 603 m mega deal

• $ 422 m to be received for sale of 70% stake in largest microfinance company in Cambodia and balance $ 181 m in 2022

LOLC Holdings PLC yesterday confirmed the much speculated mega $ 603 million (around Rs. 110 billion) deal on the sale of its controlling stake in Cambodia’s largest micro finance company.

In a filing to the Colombo Stock Exchange, LOLC said its subsidiary LOLC International Ltd. of Singapore on 6 January along with other minority shareholders of PRASAC Microfinance Institution Ltd. of Cambodia entered into a Share Purchase Agreement and a Shareholders Agreement with Kookmin Bank, the largest commercial bank in South Korea for the sale of PRASAC’s entire shareholding. 

This is subject to receiving final approval from the National Bank of Cambodia (NBC) and the Financial Services Commission of the Republic of Korea. PRASAC is the largest microfinance institution in Cambodia, LOLC said.

LOLC International which holds 70% stake in PRASAC will receive $ 603 million for the sale of its stake in two tranches. Proceeds of $ 422 million will be received upon receipt of approval from NBC and the balance $ 181 million in 2022.

LOLC said PRASAC was its first foreign investment in 2007. The LOLC Group also operates microfinance companies in Myanmar, Philippines, Indonesia, Pakistan, Zambia and Nigeria including LOLC Cambodia PLC, the fourth largest microfinance company in Cambodia.

The impending sale and announcement saw investors taking positions on LOLC share for the past two weeks propelling the share price to record high and catapulting to sixth most valued company listed on the CSE last week from 11th place in end-November 2019. 

The rise began during the week ended 27 December 2019, with LOLC Holdings’ share price gaining by Rs. 19 or 15% to close at Rs. 145.70. It hit an intra-week high of Rs. 148.90. That week saw 1.07 million shares of LOLC change hands via 1,261 trades, generating Rs. 150.5 million turnover. 

Last week, the share price peaked to its highest of Rs. 194.90, before settling at Rs. 170.30, still up by Rs. 24.60 or 17%. The week saw 4.25 million LOLC Holdings shares change hands via 6,576 for a Rs. 746.6 million turnover. However yesterday LOLC saw its share price dip by Rs. 1.30 to close at Rs. 169 whilst the ASI dropped 41 points in overall bearish sentiments.

Over 80% shareholding of LOLC Holdings PLC is controlled by Deputy Chairman Ishara Nanayakkara and related parties. Its public float is 15%, held by 2,766 shareholders. As at 30 September 2019, the public float adjusted market capitalisation was Rs. 8.9 billion.