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Monday June 24th, 2024

NDBIB: Unlocking Cross-Border Opportunities

Darshan Perera, Director and Chief Executive of NDBIB, Kaushini Laksumanage, Chief Operating Officer of NDBIB, and Saminda Weerasinghe, Chief Corporate Advisory Officer of NDBIB

NDB Investment Bank (NDBIB) is the market leader in investment banking in Sri Lanka with over 25 years of transactional expertise across its four pillars of product offerings; equity capital markets, debt capital markets, mergers and acquisitions (M&A), and corporate advisory and has significant presence in the region, especially covering Maldives and Bangladesh.

What is NDBIB’s outlook for the economy? What are the most significant challenges and opportunities you foresee?

Sri Lanka has made visible progress thus far in the revival of its economy compared to where we were in 2022. The deployment of the second tranche of the IMF Extended Fund Facility of $337 million stands as a testament to what has been achieved to date. Sri Lanka has also regained confidence and its status as an investable jurisdiction amongst some key foreign funding agencies. These include the World Bank, Asian Development Bank and the US International Development Finance Corporation (DFC) through multiple investments in the public and private sectors.

The stabilization of the rupee and the reduction in interest rates and inflation are further indicators of the progress made. These changes in the macro-environment are expected to stimulate much-needed growth in 2024, while the steady improvement in tourist inflows and anticipated Foreign Direct Investments (FDI) are expected to be the catalysts for this growth.

A key challenge that NDBIB sees is the increase of VAT to 18% and broadening of the business/product categories liable for VAT which in turn are expected to have an inflationary impact. Cost consolidation could be challenging given that 2024 will be an election year and a crowding-out effect from the private sector could be seen on the budget deficit financing front if the anticipated FDIs do not materialize as expected. The successful execution of the ongoing SOE restructuring exercise will play a pivotal role in attracting the much-needed FDIs.

NDBIB has a diverse portfolio, including equity capital markets, debt capital markets, mergers and acquisitions, and corporate advisory. Can you provide insights into the performance and future outlook for each of these areas?

With the improvements in the macroeconomic landscape and the positive sentiment that has been created across the overall economy, we see a tremendous opportunity in the investment banking space. However, the expected elections in 2024 are likely to create a challenging environment for transaction execution. Having said that, amidst a slowdown in the overall environment, NDBIB was able to successfully complete two IPOs and one listed debenture in the Financial Services in 2023 despite the extensive challenges faced by this sector. Furthermore, NDBIB is working on multiple IPOs and debenture issues that are expected to be launched in 2024, which are overwhelmingly positive indicators for both capital markets and the overall economy.

We have built an intriguing pipeline covering debt and equity capital raises in the unlisted space and M&A front as well. Following our debut fundraise in Africa in 2023, we have continued to increase our focus on offshore transactions and are working on multiple capital raises and M&As in Africa, South Asia and South East Asia. We are hoping to conclude one such transaction in the coming weeks. Cross-border transactions not only unlock our next phase of growth but also grant us access to alternate foreign funding sources that could be redirected to Sri Lanka.

Can you discuss any emerging investment banking opportunities that NDBIB is particularly excited about? How does the company plan to leverage its expertise to capitalize on these trends to benefit clients?

According to the new CBSL regulations, there will be stringent restrictions on group exposure for lending institutions. Hence, many corporates may have to focus on debt restructuring/bank debt deleveraging. With our expertise in the capital markets, along with our access to our ultimate parent, NDB Bank, the 4th largest private sector commercial bank in Sri Lanka and links we have built with other lending institutions, we expect to play a pivotal role in creating access to alternate funding sources and providing our proficiency to the deleveraging exercise.

Investment prospects in Port City, the renewable energy sector and the leisure sector are a few other opportunities that we are looking forward to being actively involved in. Our extensive expertise in structuring transactions and investment vehicles in multiple geographies is the key strength we have been leveraging on to unlock opportunities from the Colombo Port City, while our track record in the renewable and leisure sectors coupled with our deep-rooted relationships have unlocked numerous attractive opportunities that will also aid in fostering the necessary growth in these sectors.

What unique capabilities does NDBIB bring to the table to help investors unlock new opportunities? 

Cross-border collaborations and partnerships and our foreign presence are unique differentiators. We were the first Sri Lankan investment bank to venture into Bangladesh back in 2012 and are well established as the preferred investment bank in the Maldives covering debt raisings and IPOs. We have strengthened our value proposition through partnerships with global investment banks and corporate finance advisors with expertise in the UK, UAE, Japan, India, Africa and South East Asia which enables NDBIB to cater to its valued clientele in different geographies.

The diverse technical skill set of our in-house staff, covering finance, engineering, law and the sciences continues to bring ‘out of the box’ solutions for our clients. NDBIB being a part of NDB Capital Group, a diversified financial conglomerate is well positioned to offer a product range beyond investment banking covering wealth management, securities trading, and private equity.

NDB Capital Group also boasts the second-highest number of CFA charter holders in the private sector.

What are NDBIB’s growth plans for the upcoming years? 

Our primary focus is to retain our status as the ‘Best Investment Bank in Sri Lanka’, as attested by Euromoney and Asiamoney for 12 and 7 consecutive years respectively, through unblemished execution and by continuing to provide unique solutions to our local and foreign clientele.

We aim to enhance our growth trajectory via the execution of many cross-border transactions, thereby establishing our presence as a regional player and also indirectly creating avenues for Sri Lankan corporates to expand their global presence.