SBI Ventures, a Japan-based investment fund interested in providing growth capital to promising companies in the mid-market sector in Asia,’’ bought slightly under 10% of the voting shares of Commercial Bank of Ceylon PLC from the DFCC Bank on the Colombo Stock Exchange last week.
This is the first time that SBI, interested primarily in China. India, Vietnam, Taiwan and Singapore, has invested in Sri Lanka, market sources said.
DFCC which was under regulatory pressure to reduce its long-held stake in the highly profitable Commercial Bank, Wednesday sold 23.43 million shares at Rs. 250 each in a deal worth Rs. 5.95 billion.
The DFCC disclosed to the Colombo Stock Exchange that it had booked a capital profit of nearly Rs. 3.8 billion in this transaction adding that the contribution of this gain to its consolidated income would be less due to the ``higher equity accounted carrying value (of this investment) in the consolidated balance sheet.’’
Following Wednesday’s deal, DFCC which has reduced its holding of the Commercial Bank from 28.66% to 18.6% will no longer treat the bank as an associate in its books but account for it as an investment security.
The DFCC went to court to resist the Central Bank demand to reduce its holding in Commercial Bank.
``We are in court,’’ confirmed its CEO/Director Nihal Fonseka yesterday. ``We were looking for a longer time to reduce our holding though we knew we would have to start reducing at a point of time.’’
He expected that process to have started by early 2012. As an opportunity to part divest presented itself and the price was satisfactory from their perspective, they had reduced their stake.
Meanwhile Mr. Dinesh Weerakkody has resigned from the board of the DFCC Bank as he is a Director of the Commercial Bank which is no longer an associate of the DFCC.
"SBI Ven Capital is committed to creating exceptional value for our investors by building successful and truly pan-Asian companies, through leveraging on our unique strategic resources and intellectual capital,’’ a posting on SBI’s website said.
"SBI Ven Capital is the Venture Capital / Private Equity firm of the SBI Group, a listed financial services group in Japan. SBI Group currently manages US$ 3.4 billion in private equity funds. To date, SBI Group has invested in more than 500 companies.
"With our base in Japan, the SBI Group has extensive network in the key markets in Asia Pacific,’’ it said on its website.
SBI has also established a country-focus fund with State Bank of India.
source - www.sundayisland.lk
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