Belgian investment firm to take over 10% stake of Sri Lanka’s SDB Bank
A Belgian Investment Company for Developing Countries (BIO) has reportedly entered into an agreement with Sri Lanka’s SANASA Development Bank (SDB Bank) to take up a 10% stake for Rs. 925 million via the Secondary Public Offering (SPO).
According to reports, the placement with BIO is as a cornerstone investor under the identified investor category of the SPO, which is in total is offering 88 million shares at Rs. 51.50 each to raise Rs. 4.5 billion. SDB Bank has reportedly stated that BIO had expressed interest to acquire 10% shareholding in the bank. The equity move is in addition to the investment made by BIO in SDB Bank in 2019 amounting to US$ 8 million in unlisted subordinated term debt under Tier 2 Capital of SDB Bank.
Subject to the completion of the conditions, precedent stated in the Investment Agreement, BIO will subscribe to 17.95 million shares in the SPO at the Issue Price of Rs. 51.50 per share worth Rs. 924.8 million, assuming a full subscription of the total issue subject to the limits set out in the Banking Act No. 30 of 1988 (as amended), local media reports further noted.
According to SDB Bank, the proposed investment by BIO would, if completed, result in the subscription of approximately 20% of the SPO, assuming full subscription of the total issue.
BIO is a development financing institution fully owned and funded by the Belgian State and a member of European Development Finance Institutions which supports the private sector in developing countries to contribute to their economic, social prosperity and reduce poverty by directly and indirectly invest in Small and Medium Enterprises (SMEs) in emerging and developing countries.
OSL take:
The investment of a foreign investment company in Sri Lanka’s SDB Bank is indicative of the stability and potential of Sri Lanka’s banking sector. Sri Lanka’s economy has shown great resilience to external and internal challenges through the years and is once again on the path to recovery after facing the impact of the global Covid 19 pandemic. Many economic sectors in the country have also shown a positive growth momentum despite challenges posed by the pandemic. Sri Lanka is also fast becoming a business hub in the South Asian region given its geographical positioning in the Indian ocean and the many trade agreements as well as trade concessions enjoyed by the country. Given all these scenarios, foreign businesses/investors could explore business/investment opportunities in Sri Lanka.
| Article Code : | VBS/AT/20210715/Z_5 |