- One of the largest foreign investments into Sri Lanka since the start of the COVID-19 pandemic
- First post-pandemic equity placement by the IFC
- First private placement by Commercial Bank
The Commercial Bank of Ceylon has announced the completion of all formalities relating to the private placement of shares with the International Finance Corporation (IFC) and the receipt of US$ 50 million (Rs 9.215 billion) from the latter for 115,197,186 ordinary voting shares in the Bank.
This is the first foreign equity placement by Commercial Bank, the first post-pandemic equity placement by the IFC and is one of the largest foreign investments into Sri Lanka since the start of the COVID-19 pandemic, the Bank said.
The investment collectively makes the IFC, the IFC Financial Institutions Growth Fund LP (FIG Fund) and the IFC Emerging Asia Fund LP (EA Fund) the largest shareholder of the Commercial Bank of Ceylon and further strengthens the Bank’s shareholder composition by increasing its foreign shareholding up to 30%, enhancing credibility and confidence, especially among foreign investors.
The completed share allotment announced by Commercial Bank to the Colombo Stock Exchange (CSE) yesterday indicates the IFC receiving 34,559,156 shares and the IFC FIG Fund and the IFC EA Fund receiving 40,319,015 each.
“This investment by the IFC in Sri Lanka via the Commercial Bank of Ceylon is an extremely impactful vote of confidence in Sri Lanka,” the Bank’s Managing Director Mr S. Renganathan said. “This investment represents many benefits to the Bank as well as to the country, especially at a time like the present, when economies and markets are reeling from the impacts of the COVID-19 pandemic. We are delighted to have the IFC, the IFC FIG Fund and the IFC EA Fund as key institutional investors in the Bank, as it will further strengthen investor confidence while raising funds to support the Bank’s future growth.”
Significantly, the IFC equity placement was done at a premium price of Rs 80 per share, 20% more than the Weighted Average Price of Rs 66.78 for the 30 days preceding 29th June 2020, the date of the Board resolution on the private placement.
The shares allotted to the IFC, IFC FIG Fund and the IFC EA Fund via this private placement rank pari-passu in all respects with the existing ordinary voting shares of Commercial Bank and enjoy the same voting rights, rights to dividends and an equal share in the distribution of surplus assets on liquidation.
The timing of this private placement is particularly fortuitous in the light of the huge commitments Commercial Bank has been called to make in supporting Sri Lanka’s post COVID-19 economic recovery. The Bank was at the forefront of uplifting the economy of the country pre-pandemic and has been a driving force in economic recovery in the post-pandemic period, leading the private banks in granting working capital loans and providing concessions to affected businesses.
The Bank has grouped 11 different programmes being implemented for affected businesses and individuals under the umbrella of the ‘Arunella’ Financial Support Scheme and extended these relief programmes beyond the mandated debt moratorium. These concessions include flexible payment options, up to 20% rebates on accrued interest during the moratorium periods, extension of moratorium periods for up to another six months, further reductions on Credit Card repayments and applicable interest rates, and Debt Consolidation Plans.
The first Sri Lankan Bank to be listed among the Top 1000 Banks of the World and the only Sri Lankan bank to be so listed for ten years consecutively, Commercial Bank is celebrating its 100th anniversary this year. The Bank, which won more than 50 international and local awards in 2019, operates a network of 268 branches and 875 ATMs in Sri Lanka.
Commercial Bank’s overseas operations encompass Bangladesh, where the Bank operates 19 outlets; Myanmar, where it has a Representative Office in Yangon and a Microfinance company in Nay Pyi Taw; and the Maldives, where the Bank has a fully-fledged Tier I Bank with a majority stake.