Siyapatha Finance’s Rs. 1.5 b debenture issue snapped up

Siyapatha Finance PLC’s Rs. 1.5 billion worth debenture issue has been oversubscribed and was closed on 26 August. 

The company issued 10 million subordinated unsecured listed redeemable rated debentures of Rs. 100 each with an option to offer a further 5 million debentures in the event of an oversubscription of the original amount. 

Siyapatha said it had received applications for over Rs. 1.5 billion, and the basis of allotment will be notified in due course. 

The five-year debentures offered a fixed rate of 9.46% per annum, payable annually.

The objective of the fundraising initiative is to maintain the capital adequacy requirements as stipulated by the Central Bank and to finance the budgeted lending portfolio in the ordinary course of business within the next 12 months from the date of allotment.

During the second quarter of 2021, the company’s monthly leasing disbursements recorded Rs. 1.58 billion, Rs. 1 billion, and Rs. 588.6 million in April, May, and June, respectively.

The company believes that it would reach its budgeted growth from the month of September onwards, with the company’s average monthly leasing disbursement budgeted at Rs. 2 billion. 

Since the company forecasts a higher demand for loans and lease receivables than the amount to be raised via this debenture issue, the company foresees no specific risk factor in granting loans and lease receivables from the proceeds of the issue within the specified time period.

However, the company will invest the funds raised by this debenture issue in government securities at zero default risk in the interim period until such funds are disbursed for lending purposes. Investments in government securities are expected to generate a return of 3%-4% per annum at current rates. Hence, the proceeds of the issue would be utilised for the above-stated objective and will not be utilised to settle any outstanding borrowings of the company.