Thursday, October 13, 2011

People’s Leasing IPO to raise Rs 7 b


People’s Leasing announced yesterday of it’s Rs 7 billion IPO issuing 390 million ordinary shares at Rs 18 per share, the largest IPO since 2005, at a press conference in Colombo.

The IPO will be open on November 3 and will be considered a unique opportunity for investors to partner the growth of this aggressively expanding leasing company. The new shares will amount to 25 percent of the issued and paid up ordinary shares of the company subsequent to the issue.

The trend in vehicle growth in a country is driven by per capita income. As Sri Lanka expects to double its per capita income the motor industry is envisage better prospects. In this backdrop, the IPO of People’s Leasing Company Limited will be attractive for strategic investors, PLCL CEO D.P. Kumarage said.

“We do not expect substantial changes in the duty structure for motor sector and this will augur well for the industry growth and sustainability, he said.

The increase in the stated capital of the company subsequent to this issue would improve its debt to equity position and would enable the company to leverage its balance sheet and raise requisite debt financing in a comfortable manner. The IPO will also facilitate to broad-base the public ownership of the company and strengthen its identity through increased visibility in brand image amongst the public, he said.

There is scope for credit growth in Sri Lanka as Sri Lanka’s private sector credit was among the lowest in Asia highlighting the underleveraged status. It was 28 percent of GDP in Q1 2011.

The PLCL is keen on attracting long-term investors and especially the foreign investors. The company had conducted several road shows in identified countries. This was a huge success and 30 percent of the preferred allocation of shares will be for foreigners where 1.5 million shares will be offered to the retail investors and the balance will be in accordance to the tender process.

“People’s Leasing is one of the fastest growing leasing companies in the country with a clear 25 percent market share. The company processes the potential to scale to greater heights in the next decade. We are confident that the IPO will receive overwhelming response from investors, both individuals and institutional, enhancing the value for our shareholders, while strengthening our capacity to fund our ambitious growth plans in the future,” he said.

The funds raised through the issue will be utilized to part finance the loan disbursements made by the company to its customers during the remaining period of 2011/12 through financial products such as leasing, hire purchase and loans.

PLCL started its commercial operations in 1996 as a fully owned subsidiary of People’s Bank to provide leasing and related services to the bank’s customers. It has an asset base of Rs 65 billion and a workforce of over 1,000 employees at present. Its monthly disbursement value stands at Rs 5 billion and has recorded improved performance in disbursement and profitability on year on year basis where it recorded Rs 2.5 billion PAT for the last financial year.

The company provides its financial services through a wide network comprising 37 regional branches and 121 window offices located within People’s Bank branches.

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