Ceylinco Shriram to take over Multi Finance Co
Following plans by Ceylinco Shriram Securities Holdings Ltd (CSSHL) to take a 70 percent stake in The Multi Finance Company Ltd, Lanka Rating Agency (LRA) has placed the latter’s BB3/NP ratings on ‘Rating Watch’ with a developing outlook.
This reflects the potential material changes in the company’s financial and business profiles arising from the proposed capital enhancement and strategic investment by CSSHL.
LRA said in a statement that the proposed Rs 70 million investment involves controlling interest and management control of Multi Finance by CSSHL.
The capital enhancement had been initiated to satisfy the Central Bank of Sri Lanka’s minimum core capital requirement of a Rs 200 million for all registered finance companies. The Rs 70 million represents the initial investment needed to satisfy the first target of Rs 100 million. CSSHL has also agreed to invest the additional capital requirements of Multi Finance in order to meet statutory provisions, as and when required, LRA said.
“While the capital enhancement reflects positively on Multi Finance, the new management’s risk appetite is still unclear vis-à-vis business and financial strategies. LRA expects to resolve the Rating Watch on Multi Finance upon reassessment of the company’s new management and future business strategies,” the statement said.