Sri Lanka: NDB Raises US $ 125 Mn with IFC
Sri Lanka, April, 01 2014 -
National Development Bank has been provided with a US$125 million financing package by IFC, a member of the World Bank Group to expand access to finance for over 50,000 micro, small and medium enterprises over the next four years, an official statement by IFC said.
The financing package includes a loan from IFC’s own account of US$ 20 million, and US$ 105 million from other banks – Union National Bank; UAE, US$ 25 million; HSBC, US$ 25 million; Standard Chartered, US$ 20 million; Axis Bank, India, US$ 15 million; Doha Bank, Qatar, US$ 10 million and Bank Muscat, Oman, US$ 10 million.
Additionally, another US$ 70 million will be raised from other international developmental financial institutions by June 2014 according to the statement and this is said to be IFC’s largest investment, as well as its largest syndication in Sri Lanka according to the IFC. HSBC was the strategic advisor to the syndication.
“IFC’s funding will add much-needed funding support to NDB’s lending programme, helping scale up our loan portfolio across the country. We are delighted to see how our partnership with IFC has progressively created significant value to our business model” Director and Chief Executive Officer, NDB Rajendra Theagarajah has said.
“IFC’s syndication for NDB demonstrates growing investor confidence in Sri Lanka, and will help NDB expand financing options across the country for small and medium enterprises,” IFC country manager for Sri Lanka and Maldives Adam Sack has said. .
Last year, IFC extended a loan for US$ 24 million to NDB to support the bank’s growth plans generating employment opportunities and providing access to long term funding to small businesses.
In 2013 Budget proposals that were presented in November 2012, NDB was provided a window to raise funds from the international market up to US $ 250 million with country’s other development financier, DFCC, which was also offered the opportunity by the Government of Sri Lanka with Guarantees whilst only DFCC raised US $ 100 million from international markets in 2013.
After failing to raise US $ 250 million by November last year NDB announced its plans for Rs. 10 billion listed debt, the largest ever debenture issue a listed company has so far announced in domestic capital market history. NDB’s Rs. 10 billion debenture issue was oversubscribed consequently, having reached the necessary outcome within 10 minutes of its opening in December 2013. With four types of A+ debentures to choose from under three tenures – ranging from five, 10 and 12 years, the bank issued 50 million rated, unsecured, subordinated, redeemable debentures at Rs. 100 each with an option to issue a further 30 million debentures and another option of 20 million debentures in the event of over subscription of the first two options.
Meanwhile IFC said Sri Lanka is a priority country for IFC with its committed portfolio of US$ 290 million in Sri Lanka that covers projects across a range of sectors, including infrastructure, tourism, renewable energy, finance, and healthcare. IFC also provides advisory services to promote sustainable growth among small and medium enterprises by facilitating access to finance, and by offering capacity-building and training opportunities.