Strategic merger of two key LOLC units good for regional expansion
A recent strategic merger between two units in the LOLC Group has resulted in the creation of the country’s largest non-bank financial institution ( NBFI) with a total assets base of Rs. 212 billion and a lending book of Rs. 152 billion.
The merger was between LOLC Micro Credit Ltd ( LOMC) and LOLC Finance PLC ( LOFC) into one unit - LOFC, was approved by the Central Bank ( CB) on March 28, LOLC said in a media release this week. The joint, profit- before- tax profitability of the two entities as at December 2017 was Rs. 3.3 billion.
“The high yielding micro portfolio of LOMC aptly complements the SME book of LOFC while LOFC’s ability to raise public deposits enables LOMC’s clientele to access the savings and FD products with the company. Furthermore, this strategic merger provides a successful model for CB’s financial services sector consolidation plan,” the release added.
Commenting on this development, Group Managing Director, Kapila Jayawardena, says, “This new merged entity, which is effectively the largest NBFI in the country, is poised to achieve many historic milestones going ahead. Customers in the SME sector as well as the micro sector can expect a superior experience with the merged entity as they will have access to total financial solutions under LOFC.”
LOFC has 135 branches across Sri Lanka and offers a wide range of financial services solutions spanning from loans and leases, fixed deposits and savings and foreign currency deposits and is also one of the prominent players in the Islamic finance space in the country, offering innovative solutions.
The release said that LOMC, formed in 2008 with the support of large bilateral and multilateral funding agencies like FMO and GTZ, has become “the most sought after financial solutions provider in the micro sector and at the time of merger served close to 500,000 micro clients as the largest micro credit company in Sri Lanka.”
“Buoyed by the success of the merger and its unique business model, it will provide the pivot to the group’s on- going regional expansion in microfinance in Myanmar, Cambodia, Pakistan and Indonesia,” the release added.