DFCC’S rights issue concludes
DFCC Bank concluded its rights issue recently with subscriptions reaching over 43 percent of the total Rs. 7.6 billion on offer.
This rights issue was the culmination of DFCC’S capital raising programme for this year and came on the heels of a Rs. 10 billion debenture issue, which was oversubscribed.
The capital so raised will enable DFCC to comfortably meet regulatory and funding requirements going forward and provide the Bank a stronger base on which to achieve its medium term goals.
Commenting on the issue, Lakshman Silva, DFCC’S CEO said, ‘‘I am grateful to shareholders who subscribed for their rights and non-shareholders who also subscribed to the issue. Understandably, the depressed equity market and other considerations may have had a bearing on the investment decisions of some shareholders.
The tragic events of Easter Sunday occurring just a day before our last date for acceptance of payments also unfortunately had an impact on the level of subscription.
I am however, pleased that a majority of the shareholders viewed the Rights Issue as an ideal opportunity to maintain/ increase their holding in DFCC at a cost well below its intrinsic value.
This augmentation of the bank’s equity capital base will provide the impetus for stronger growth, whereby shareholders will benefit not only by the enhanced value created, but also by a recovery in the equity market. I must also add that in the context of this rights issue, DFCC’S last call on shareholders was way back in 2007. Given the growth that has taken place, this indicates that the bank has a well-planned strategy for balancing its capital sourcing through a judicious level of gearing.
“Although there was a shortfall in the level of subscriptions for this issue, the resultant equity boost ensures that DFCC’S capital base will continue to be comfortably above regulatory requirements for the medium term growth envisaged by the bank. Moreover, it would enable DFCC to consider other non-organic growth options that will enhance shareholder value”.
DFCC is unique among private financial institutions in Sri Lanka. While the Bank has a development banking heritage going back over 60 years, it has successfully transformed itself into a full commercial bank without diluting its project financing expertise. Today, DFCC’S pioneering culture is being successfully migrated from development financing to commercial banking and this is very evident in the bank’s cutting edge offerings that include many firsts in digital products and services to corporate and retail customers.