Foreign purchaser of ETIFL assets dumps Swarnamahal Financial out of deal

„Value of the deal comes down by US $ 5mn to US $ 70mn as a result „Several investors show interest in ETIFL, Swarnamahal Finance

The buyer of the troubled ETI Finance Limited’s (ETIFL) assets has decided to refrain from purchasing Swarnamahal Financial Services, thereby bringing down the value of the deal to US$ 70 million from the original US$ 75 million.

“There is an issue regarding the Swarnamahal Financial Services PLC among the purchases, ETI and ourselves in terms of valuation. Now the purchaser says that they don’t want Swarnamahal Financial Services. Hence, The Monetary Board of the Central Bank decided to agree to US $70 million as it was the only offer that came through,” Central Bank (CB) Governor Dr. Indrajit Coomaraswamy said last week.

He told Mirror Business that two parties have shown interest to purchase Swarnamahal Financial Services PLC. However, he noted that it’s unclear to what extent they are serious of the purchase.

Swarnamahal Financial Services had Rs.2.5 billion worth deposits taken from 2,300 depositors as of last year.

The Central Bank last year gave its approval to the board of directors of ETIFL to sell the assets of ETIFL to a joint venture company between Singapore-based Blue Summit Group and its local partner Ben Holdings for US$ 75 million.

So far, ETIFL has received US $54 million as payment, and US $54 million worth assets of the company have been transferred to the purchaser including EAP Broadcasting Company Ltd.

Dr. Coomaraswamy said that ETIFL has settled 20 percent of deposits of each depositor utilising that money.

After receiving the remaining US $16 million this month, he said that another 10 percent of depositors’ money would be paid back. Meanwhile, he said that another investor has put forward a proposal to invest in ETIFL to revive the troubled finance company.

According to sources, the proposal is put forward by a foreign investor linked to Edirisinghe family.

“There’s a proposal to invest in ETI directly. The Investor has submitted a proposal to ETI and the Monetary Board has approved it for consideration; but it’s in very early stages.

We haven’t seen neither proof of funds nor credentials of the investor,” he said.

ETIFL has about 24,000 depositors with Rs.33 billion in deposits. However, there’s a hole in assets and liabilities of about US $100 million.