Regulatory nod for merging of LOLC group finance firms

A merger of finance companies within the LOLC group has received regulatory approval from the Central Bank, according to a disclosure made to the Colombo Stock Exchange.

LOLC Finance PLC said that it has received the green light to acquire 100 percent of the shares of LOLC Micro Credit Ltd (LOMC) and merge with it in line with the finance sector consolidation plans.

Currently, the group parent Lanka ORIX Leasing Company PLC (LOLC) owns 90 percent of the shares in LOLC Finance, while LOMC is 80 percent owned by LOLC and 20 percent by Netherlands Development Finance Company (FMO).

Due to the increase in the asset base of the merged entity, LOLC Finance will raise capital via a Rs. 5.9 billion rights issue, to meet regulatory capital adequacy requirements.

The firm will issue 1.4 billion shares, in the proportion of one new share for every two shares held, at a consideration of Rs. 4.20 per share.

LOLC Finance shares ended trading at Rs. 3.70 yesterday, after gaining 40 cents in intraday trading.

The rights issue requires approval from the Colombo Stock Exchange and LOLC Finance shareholders.

LOLC Finance said that it is expecting significant growth in assets as the synergies made by the merger is poised to unlock new market opportunities.