International Finance Corporation says ready to invest more in Sri Lanka
Daily FT: The International Finance Corporation’s (IFC) Asia Pacific Vice President Riccardo Puliti last week expressed readiness to enhance investments in Sri Lanka in tandem with improved outlook.
This optimism follows the IFC, announcing its first equity investment of $ 10 million in Sunshine Holdings’ healthcare subsidiary to increase its pharmaceutical manufacturing capacity and expand the pharmaceutical retail footprint. This is the second investment IFC is making into the conglomerate with the previous one being $ 5 million to help it diversify the business portfolio. It is also one of the first equity investments in recent years with some of the previous ones being PickMe, Cargills Ceylon Plc and SDB Bank. IFC’s major equity investment is in Commercial Bank Plc holding 14.45% stake.
IFC’s active financial support portfolio for Sri Lanka is around $ 400 million and Puliti said that the World Bank’s private sector investment arm would like to expand further.
“I would lie to you if I say that I’m satisfied (with the $ 400 million) because I’m not. IFC would be very happy to increase all the possible financial support we can give to the private sector in the country,” he told the Daily FT in an exclusive interview.
He singled out the planned $ 10 million investment in Sunshine Healthcare since usually in the packing order of financial risk, equity is the riskier. “It is easier to lend than to provide equity. I think that it is a good early sign on how everybody feels more comfortable with how Sri Lanka is having positive economic momentum,” Puliti emphasised.
“We are really ready to put in our equity and hope that many other international investors, public or private, will follow suit. For us, the demonstration effect of investing in equity is quite important,” he added.
“Sri Lanka deserves more funding and we have a strong pipeline for the future. We could go up pretty quick if the conditions are present. We would be very happy to be a major investor in finance here if the conditions are fine. Because of the potential of Sri Lanka, we could do more. We really want to be part of Sri Lanka that is transforming,” stressed Puliti.
“From providing banks with a much-needed cross-currency swap facility a year ago, to now investing in equity, IFC is committed to supporting Sri Lanka as it transitions from stabilisation to sustainable growth. This is a vote of confidence in the country’s private sector and economic recovery,” he added.
In what was his first visit to Sri Lanka, IFC also separately in partnership with the European Union (EU) partnered with the Commercial Bank of Ceylon (CBC) to scale up green finance, supporting the country’s commitments towards a low-carbon economy.
IFC will help the Commercial Bank to develop their green lending capability through advisory with funding extended by the EU. He described the arrangement as important as in the future more financing will come to the financial sector in Sri Lanka through green lending.
The IFC Asia Pacific Vice President commended Sri Lanka’s progress in stabilising the economy following the unprecedented crises faced two years ago.
“We see in a very positive note the change, the stabilisation of the Sri Lankan economy.
OSL take:
Sri Lanka’s resilience and economic strength that helped thr country bounce back and return to a growth path after facing challenging economic conditions during the past few years have sent out a positive message on the increasing stability in the country. Also, the ongoing economic activities and the target of becoming a regional hub in South Asia supported by the country’s geographical positioning in the Indian Ocean and the strong trade ties, have all resulted in the expansion of business/investment opportunities in the country. IFC’s announcement of increasing investments in Sri Lanka is a clear indication of the increasing confidence among foreign investors including multilateral financial institutions in Sri Lanka. Foreign businesses/investors could therefore confidently explore the expanding business/investment opportunities in Sri Lanka and collaborations with foreign businesses. Given the country’s growth and business potential with a target of becoming a regional hub, foreign businesses/investors could also look at setting up base in Sri Lanka to engage with other countries in the region.