Sri Lankaâ€™s First Capital A- rating confirmed by ICRA
ECONOMYNEXT – ICRA Lanka Limited has confirmed the issuer rating of SL[A-] with stable outlook for First Capital Holdings PLC (First Capital).
ICRA Lanka Limited, a subsidiary of ICRA Limited, a group company of Moody’s Investors Service, also confirmed the issuer rating [SL]A- with stable outlook for First Capital’s standalone primary dealer First Capital Treasuries PLC.
First Capital Treasuries accounts for 70% of the consolidated assets and 80% of the consolidated net trading income of First Capital for FY2017, a statement said.
The ratings take note of First Capital’s efforts to expand the business and financial performances of the other subsidiaries, which are engaged in corporate debt structuring, corporate finance, asset management, stock broking, extending margin trading facilities and trustee services.
However, the scale of operations of these subsidiaries continues to remain moderate.
“First Capital’s borrowings are largely short term in nature and are used for investment and lending to group entities,” the statement said.
The rating factors the First Capital group’s established relationships with banks and financial institutions, providing access to funding.
ICRA Lanka said it expects timely funding support from First Capital Treasuries, considering the liquid nature of its assets.
First Capital, being a holding company, derives its income from the dividends from the group entities and income from its investments, which includes interest income and profit from investments.
For the FY2017 stand-alone income from investment activities improved, to Rs774 million total income in FY2017 from Rs336 million in FY2016, while the share of profit from subsidiaries increased steeply to Rs194 million in FY2017 from Rs14 million in FY2016.
First Capital Holdings group firms include First Capital Limited involved in structuring and placement of corporate debt and corporate finance advisory services and investments, First Capital Asset Management Limited involved in unit trust and portfolio management, First Capital Markets Limited involved in providing margin trading facilities and dealing and broking of listed debts, First Capital Trustee Services (Pvt) Limited a trustee services provider for corporate debt securities and First Capital Equities (Pvt) Limited engaged in stock broking activities.
(COLOMBO, October 16, 2017)