LOLC tailing high market cap
LOLC prices went up to Rs. 190 on Tuesday bringing it to the fifth largest stock in market cap on the Colombo bourse at Rs. 90 billion on the back of the impending Rs. 108 billion sale of its part stake in Cambodia’s PRASAC Microfinance to Korean KB Kookmin Bank.
This is the largest transaction by any local entity. This proposed sale is in line with the company’s core strategy of developing and disposing assets, a LOLC official told the Business Times. “This is a continual process for us. We will be disposing assets we have overseas depending on the opportunities that come my way," he explained. The company’s only official announcement to the stock exchange was to say that with certain parties indicating their interest in acquiring a stake in PRASAC Microfinance, LOLC has been in the process of exploring possibilities of a sale of whole or part of its holding. The official said an announcement will come next week.
PRASAC Microfinance is LOLC’s maiden international investment. While being the largest, it has 40 per cent of market share in Cambodia with 177 branches.
Microfinance is a general term to describe financial services, such as loans, savings, insurance and fund transfers to entrepreneurs, small businesses and individuals who lack access to traditional banking services. LOLC’s microfinance model keeps transforming and enabling micro businesses to become small and medium level enterprises through sustainable industrialisation. LOLC began to reap the dividends of its strategic initiatives of expanding its footprint overseas, in the Asian region and now boasts 85 per cent of its pre-tax profit through investments in Cambodia, Myanmar, Pakistan, Indonesia and Philippines. In 2017, LOLC signed a joint venture with Pak Oman Microfinance Bank Ltd of Pakistan and the group has plans to foray into Indonesia next year and the Philippines thereafter, through acquisitions, the official said.
According to the official, strategic investments into non-financial sectors such as leisure, plantations, construction, health care and trading and manufacturing also complement the growth in LOLC’s financial sector. He noted that the group also aims to expand investments in industries in identified growth sectors such as healthcare and leisure and also invest in sunshine industries. (DEC)