Sri Lanka’s Softlogic to hive off equity to raise funds for retail expansion
ECONOMYNEXT- Sri Lanka’s Softlogic Holdings group plans to hive off equity to raise funds in its retail sector which was restructured under a retail holding company.
Softlogic group, which has interests in retail, financial services, healthcare, tourism and automobiles, made a loss of 762 million rupees in the September 2019 quarter, according to interim results filed with the stock exchange.
The company has high finance costs owing to borrowings with its core businesses only recovering slowly after April’s bombings which affected tourism and retail trade.
Softlogic Holdings chairman Ashok Pathirage said in a note accompanying the accounts the group’s capital raising measures in the retail sector were progressing well.
“We expect to raise such funds by way of hiving off equity before the close of this financial year.”
Softlogic has said it plans to fund the future capital spending requirements of the retail business at subsidiary level and to repay some of the debt extended by the holding company.
Fund raising for expansion purposes were envisaged with the creation of the retail holding company, ICRA Lanka rating agency has said.
Softlogic group’s ability to raise funds at subsidiary level to meet capital spending needs and improve profitability of subsidiaries, reducing borrowings from the holding company are crucial to improving its credit profile, it has said.
(COLOMBO, 22 November 2019)