ComBank receives $50 m equity from IFC

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 in a media release.

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 per cent, 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 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 per cent more than the Weighted Average Price of Rs. 66.78 for the 30 days preceding June 29, 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.