SDB bank aims to raise Rs. 4.5 b via secondary public offering

Sanasa Development Bank (SDB bank) plans to raise Rs. 4.5 billion via its secondary public offering.

The bank said this week it would offer 68 million shares at Rs. 51.50 each (Rs. 3.5 billion) and in the event of an oversubscription of the initial issue it would make available a further 20 million shares at the same price (Rs. 1.03 billion).

Previously only the number of shares was announced.

The issue price is based on one month Volume Weighted Average Price of SDB bank share as at 20 May 2021 (i.e. three market days before the Extraordinary General Meeting). Shareholders approved the SPO at the EGM held on 28 May.

The SDB bank shares on Wednesday closed unchanged at Rs. 51.10 below the offer price. Its net asset value per share as at 31 March 2021 was Rs. 112, up from Rs. 108 as at 31 December 2020.

It said in the event of an oversubscription the bank reserved the right to allot shares under the SPO to 50% for identified investors, 37.5% for existing shareholders and 12.5% for others. 

The Board of Directors will allocate 20% of the new shares to retail individual investors who may comprise of existing shareholders or other investors. An individual investor must subscribe for a maximum of 3,800 shares or a value not more than Rs. 200,000 to be deemed as retail individual investors for share allotment purposes.

Public float of SDB bank is 84.72% held by 38,738 shareholders. Among major shareholders are Ayenka Holdings Ltd. (12.48%), Senthilverl Holdings (11.5%), Dutch FMO (10%), IFC (5.9%) and SBI Emerging Asia Financial Sector Fund (3%).

SDB bank said further information of SPO as relevant including the opening date would be disclosed in due course. 

It has already submitted an additional listing application to the Colombo Stock Exchange (CSE) seeking an in-principle approval to list the new shares whilst the SPO is subject to approval from the CSE.

Proceeds from the SPO would be used to further strengthen the equity base of the bank and thereby improve the capital adequacy ratios in line with BASEL III guidelines of the Central Bank and to part finance the growth in the loan portfolio envisaged during FY21 to FY22.

The bank’s assets rose by 20% to Rs. 129 billion in 2020. Total gross advances grew by 18% to Rs. 103.7 billion.

In December last year SDB bank raised Rs. 1.5 billion through a Rights Issue.

For the quarter ended 31 March 2021, SDB Bank’s net interest income grew by 11% to Rs. 1.6 billion and total operating income by 14% to Rs. 1.8 billion. Operating profit before VAT was Rs. 484.5 million, up by 77% from a year earlier. Pre-tax profit grew by 101% to Rs. 342.2 million and after tax profit improved by 190% to Rs. 302 million.

In 2020 SDB bank increased net profit by 230% to Rs. 835 million, the highest in its history.

A final dividend of Rs. 2.25 per share for the year ended 31 December 2020 was declared in April.