LOLC group entities to delist shares; list debt securities to remain in bourse

Three LOLC group companies have decided to pull out their shares from the Colombo Stock Exchange (CSE) as they failed to meet the minimum public holding requirement.

But they will list their debt instruments to remain on the Colombo bourse. The CSE had transferred the LOLC group subsidiaries LOLC Finance PLC, Commercial Leasing & Finance PLC and Brac Lanka Finance PLC to the Watch List for their failure to meet the minimum public holding requirement.

The stock exchange gave the entities 20 months to comply with the rule.

But the shareholders of the three companies during their annual general meetings held on September 28 had decided to delist all their equity securities from the CSE and list debt securities instead to ensure the firms are not in violation of the Listing Rules and any Central Bank directives.

As of June 30, 2018, the holding company, Lanka Orix Leasing Company PLC (LOLC), held a 93.33 percent stake in LOLC Finance PLC and a 98.921 percent stake in Commercial Leasing & Finance PLC.

LOLC held a 99.89 percent stake in Brac Lanka Finance PLC together with Commercial Leasing & Finance PLC.

The CSE together with the Securities and Exchange Commission introduced the minimum public holding requirement for listed entities with time to comply, in an attempt to improve market liquidity.

But the entities, whose ownerships are largely concentrated among a handful of highnet-worth or institutional investors, did not want to dilute their stakes to meet the CSE rule. As a result, some firms delisted and some downgraded themselves to the secondary board.

Lanka Orix Leasing Company, whose shareholders ratified a name change to LOLC Holdings PLC last week with the exit of Japan’s Orix Corporation this March, is controlled by high-net-worth investor and business leader, Ishara Nanayakkara.

Following Orix Corporation’s exit, Nanayakkara now owns a 78.88 percent stake in LOLC Holdings PLC.