Sri Lanka’s People’s Bank group rejects Sterling Capital’s mandatory offer for leasing firm

ECONOMYNEXT – State banking group People’s Bank and its subsidiary People’s Leasing and Finance will not take up a mandatory offer by Sterling Capital Investments for remaining shares of People’s Merchant Finance, a stock exchange filing said.

Sterling Capital Investments, an exporter of Japanese vehicles to Sri Lanka, completed its 1.36 billion rupee takeover of People’s Merchant Finance (PMF) through a private placement of shares and a rights issue last week.

The deal triggered a mandatory offer for the remaining 32.1 percent stake, but People’s Bank and its listed subsidiary People’s Leasing and Finance which together hold 28 percent of PMF will not sell their shares.

Sterling Capital’s mandatory offer for the remaining shares is priced at 9.50 rupees a share, the same rate at which it bought PMF.

The offer is for a little more than 67.6 million shares representing 32.1 percent of the paid up ordinary voting shares of PMF.

People’s Bank which holds 16.1 percent of PMF will not accept the mandatory offer, nor will People’s Leasing and Finance which has a 11.9 percent stake, the filing said.

The capital infusion by Sterling Capital at 9.50 rupees a share gives it a stake of 67.9 percent in People’s Merchant Finance, a stock exchange filing said.

NDB Investment Bank, which was the sole advisor to the deal, said Sterling Capital’s 1.3 billion rupee investment was partly through a 160 million rupee private placement and the rest by subscribing to 126,384,052 ordinary voting shares of PMF by way of a rights issue.

People’s Merchant Finance struck a deal with Sterling Capital after dropping a possible merger with People’s Leasing and Finance in January.

Sterling Capital’s investment raises PMF’s regulatory minimum capital over the minimum of 1.5 billion rupees stipulated by the Central Bank.

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Sterling Capital Investments is a subsidiary of Rush Japan Corporation owned by Anuja and Roshana Molligoda. Sterling Group is one of the largest vehicle exporters from Japan to Sri Lanka with numerous automobile dealers spread across the country. (COLOMBO, 13 May 2019)
 

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