Thai firm buys 30% stake in Commercial Credit for Rs. 10.56 b

• Acquisition valued at $ 70 million marks Group Lease Public Company’s first major expansion outside of the ASEAN region
• Deal also nets CCF subsidiary BG Microfinance Myanmar for $ 8 m

In what has been described as a historic financial transaction, Group Lease Public Company Ltd., (GLPCL), a Thailand-based digital finance company listed on its Stock Exchange, yesterday bought near 30% stake in Commercial Credit & Finance Plc (CCF) for USD 70 million on the CSE. The transaction valued at over Rs. 10.56 Billion is one of the highest recorded on the CSE.

In the same exercise, BG Investments (Pvt.) Ltd and related companies along with CCF sold 100% stake in microfinance subsidiary in Myanmar - BG Microfinance Myanmar Co Ltd (BGMM) - for a consideration of $ 8.0m to GLPCL. The CCF stake of 28.1% was valued at $ 2.284 million and works out to Rs. 330 million at the current exchange rate of Rs. / USD 146.85. CCF will book a profit of Rs. 277.21 million before taxes on the transaction. The strike price of Rs. 111 was far above the net asset value and market value of CCF.Net assets per share at Company level was Rs. 27.59 as at 30 September 2016 and Rs. 28.40 at Group level. As at 30 September Company assets amounted to Rs. 74.3 billion and Rs. 76.4 billion at Group level. Liabilities were Rs. 65.5 billion and Rs. 67.3 billion respectively. 

Commercial Credit closed at Rs. 60.60, down by Rs. 3.80. In giving 29.9% stake to Thai investor, BG Investments sold down 6.98% from 44.86% while it also has few more shareholding and Creation Investment Sri Lanka LLC shed 22.26% from its 28.66%. Individual shareholder S.L. Lafrance sold his entirety of 0.74% stake though it is not sure how he figured to strike a deal with major shareholders with such a minute shareholding. Public shareholding is 14.5% with 1,498 shareholders. 

“First announced in September this year, the former is a historical transaction in terms of size. Two years ago, the investment of Rs. 1.68 billion (US$12.8 million equivalent) by Creation Investments Sri Lanka LLC was the biggest foreign investment into a finance company. Commercial Credit is very happy to partner with GLPCL where we see a long term win-win partnership through this investment with many opportunities for capital raising, synergies and growth,” said Commercial Credit’s Chief Operating Officer Rajiv Casie Chitty.

GL’s Chairman/CEO Mitsuji Konoshita sees this decision to buy 29.99% of Commercial Credit & Finance Plc (CCF) as one which will further enhance the strategic partnership between the two groups. “We look to combine our efficient digital finance platform with CCF’s very successful track record in the field of finance, to grow our businesses in all markets where we are and will be present, while CCF’s need to access to capital can easily be met by our capability to raise funds internationally”.

The acquisition valued at USD 70 million marks GL’s first major expansion outside of the ASEAN region. From its home base in Thailand, GL has expanded successfully into Cambodia, Laos, Indonesia and, more recently, Myanmar through BGMM.

With a history of 34 years, Commercial Credit and Finance PLC is one of Sri Lanka’s leading finance companies with a total asset base of Rs. 70 billion as at 31 March 2016. It is listed on the Colombo Stock Exchange. 

CCF offers a wide portfolio of products and services including Fixed Deposits, Savings, Leasing, Hire Purchase, Education Loans, Real Estate, Term Loans, Gold Loans, Revolving Business Loans, Factoring, and Microfinance products which are offered in over 120 locations across the country. Upgraded branch facilities and cutting-edge marketing strategies continue to garner the Company a rapidly expanding and loyal client network. 

In October, Reuters reported GL as Thai motorcycle lessor with assets of $450 million. It was stated as one of Thailand’s biggest three motorcycle lessors with a market share of 10%  to 11%. It is the market leader in Cambodia and Laos with shares of 95% and 40%, respectively.

Group Lease, part of Japan’s Wedge Holdings Co. Group Lease plans to combine its digital finance platform, including electronic payment and insurance, with CCF’s microfinance model to grow business, Konoshita was quoted as saying by Reuters.