IFC, a member of the World Bank Group, and funds managed by IFC Asset Management Company (AMC) have signed an agreement to invest up to $50 million through a private placement of new equity shares in Commercial Bank of Ceylon (ComBank), Sri Lanka’s largest private bank. The investment will help the Bank continue to grow in Sri Lanka and overseas and build up resiliency in the wake of COVID-19.
The move, which is subject to certain conditions including regulatory approvals, comes after IFC earlier this month extended a $50 million loan to ComBank, as part of IFC’s US$8 billion global COVID-19 fast track financing facility, which aims to help companies stay in business and preserve jobs.
This equity investment includes up to $15 million from IFC and up to $35 million mobilized from IFC Financial Institutions Growth Fund and IFC Emerging Asia Fund managed by AMC. The investment, which comes as IFC marks 50 years of work in Sri Lanka, will help ComBank sustain its operations and support the economic recovery process.
“Commercial Bank is proud and honored to partner in this initiative with IFC, especially during this global pandemic situation. This placement will benefit the existing shareholders due to its attractive price that has great potential to stabilize the share price of the Bank and also will bring dynamism to the capital market. This additional cash flow will also help to mitigate some of the adverse effects brought about by the pandemic outbreak and will assist the economic revival in line with the efforts of the government. I take this opportunity to thank the IFC team and ComBank team for working tirelessly to bring this placement to fruition,” said S. Renganathan, Managing Director/Chief Executive Officer, Commercial Bank of Ceylon PLC.
Over the 50 years of IFC’s operations in Sri Lanka, ComBank has been a longstanding partner of IFC, dating back to 2003. IFC has supported ComBank through multiple investments as well as through advisory support and currently holds a 4.4 percent equity stake.
“In light of the challenges and disruptions that Sri Lanka is facing with the impacts of the COVID-19 pandemic, it is even more important that the country’s financial sector remains sound and well capitalized,” said Amena Arif, IFC Country Manager for Sri Lanka and the Maldives. “It is why IFC has already supported ComBank with financing to help ensure small and medium sized enterprises gain the funds they need to survive and thrive in the future. This equity investment will provide critical countercyclical financing to ComBank, at a time when investor sentiment has been wavering. These efforts are critical to paving the way for a resilient recovery in the country.”
These investments come after a period of several economic challenges and decreasing tourist arrivals in Sri Lanka following the April 2019 terrorist attacks. The economic malaise was further compounded by the outbreak of COVID-19 earlier this year. IFC’s investments in Sri Lanka will help secure and protect thousands of jobs in the country.