Following a series of strategic acquisitions and investments made in the financial and other high growth sectors such as leisure, construction, technology, agriculture and renewable energy, LOLC had sought and been subsequently granted approval by Central Bank to formally operate as the holding company of the Group. This is instead of continuing to function as a finance leasing company.
LOLC, the pioneer in leasing in Sri Lanka, said the Group would continue to offer finance leasing products through its subsidiaries Lanka Orix Finance Company Ltd., which is to be listed shortly, the Commercial Leasing Company Ltd. and LOLC Micro Credit Ltd.
It was emphasised that migration to a holding company structure was expected to “set the stage for LOLC Group to reach a phase of exponential growth in the coming years with its operations becoming even more structured and straight forward for its regulators and long standing funding partners”.
LOLC also said the Group would also be in a better position to maintain the high standard of transparency and good governance practices, which it described as being “of extreme importance to the group”.
The holding company structure will also result in the group being able to further enhance the benefits generated by economies of scale with the successfully adopted shared services model among group companies.
This operational model, LOLC said, had resulted in the group being able to harness and maximise the usage of available human resource skills as well as achieve greater cohesiveness and focus in the macro goals of the group.
“With a strong presence in the northern and eastern parts of the country, which are going through a period of accelerated development and with a country-wide network of more than 140 locations offering customised financial solutions to thousands of customers, the LOLC group is poised to give leadership to the post war development in the country,” LOLC said.
Analysts have described LOLC’s recent diversification as “exponential.” For example its assets in the current 2010/11 financial year surpassed the Rs. 100 billion mark and amounted to Rs. 108 billion as at 31 December, 2010 as opposed to Rs. 10.7 billion in 2005 and Rs. 46.2 billion in 2009. It was in 2009/10 that it made several strategic acquisitions after controlling shareholders led by Raja and Ishara Nanayakkara strengthened their positions and the management including the placement of former Citibank Sri Lanka CEO Kapila Jayawardena as the Group CEO and Managing Director. ORIX Corporation of Japan co-founder of LOLC owns 30% stake and is also represented on the Board.
Whilst a formal classification of it as a diversified holding and subsequent placement within the diversified sector listed companies is pending, the 30 year old LOLC has already overtaken several of the old league conglomerates in profits (see table). In terms of net profit attributable to equity shareholders LOLC is second only to premier blue chip JKH though LOLC is at the top in terms of assets. LOLC’s after-tax profit in the first nine months of 2010/11 is more than the combined profit of past four years whilst its market capitalisation has rocketed in the past year.
source - www.ft.lk
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