Private equity is key focus area, says NDB Capital Holdings

Venture capital & private equity investments on the cards

The National Development Bank (NDB) is looking at expanding its portfolio with new businesses including venture capital, private equity investments and related areas of capital structuring utilizing new capital derived from the Aviva NDB Insurance sale which infused Rs.6 billion cash into the bank, the bank's Chairman, Mr. Hemaka Amarasuriya has said in its annual report.

He said that the realized capital gain "will be put to use shortly," and identified the possible new businesses they were looking at.

"Private equity is virgin territory in our market today and NDB Investment Bank who has pioneered many new initiatives is ideally placed to enter this lucrative business as the 'first on line'," Amarasuriya said.

He made the point that the significant capital gain from the divestment of Aviva NDB Insurance had strengthened the bank's capital base and it will now be able to approach the upcoming Basel III requirements "in comfort."

"Simultaneously while divesting from NDB Aviva Insurance Company, we were able to sign a 20-year agreement for bancassurance with the new owners AIA enabling our core bancassurance business to remain undisturbed despite the disposal of the investment," he said.

He said that NDB had also purchased Aviva's share of NDB Aviva Wealth Management which has now become a 100% subsidiary of NDB Capital Holdings PLC which in itself is a 99.9% owned subsidiary of NDB while signing an agreement (similar to the bancassurance arrangement) which enables the bank to manage the insurance funds of the new owners of Aviva NDB.

Although their non-performing loans ratio of 1.3% is the lowest in the industry, the Central Bank's imposition of an 18% credit limit on the banking sector had compelled them to lend selectively "and quell demand patterns from a debt hungry market,'' Amarasuriya noted.

He also revealed that Central Bank has made a policy directive requiring the opening of two new branches in the outer provinces for every branch opened in the prosperous Western Province.

This has been instrumental in taking banking infrastructure towards the periphery.

The year under review had seen NDB group profits attributable to shareholders significantly increased by 250% to Rs.8.8 billion with the bank posting a profit after-tax of Rs.2.9 billion, up 60% from a year earlier while the group profit of Rs.8.9 billion was up 223% from a year earlier largely on account of the capital gain realized from the Aviva NDB sale.

NDB's capital deposit base had now reached Rs.107.6 billion, the report revealed.

The bank's CEO, Mr. Russell de Mel said that the SME segment will continue as a key priority in 2013 in line with the national economic strategy. The bank would promote grass root entrepreneurship and work towards creating a conducive business environment for SMEs.

The NDB has a stated capital of Rs.1.09 billion, a statutory reserve of Rs.878.7 million, an investment fund of Rs.924.3 million and retained earnings of Rs.12 billion in its books. Its total assets ran at Rs.163.5 billion and total liabilities at Rs.148.5 billion.

The Bank of Ceylon with 9.97% of the NDB is its largest shareholder followed by EPF with 9.63% and the General Fund of the Sri Lanka Insurance Corporation with 5.72%. The Insurance Corporation's Life Fund owns 4.75% and Dr. Sena Yaddehige 5.28%.

Among other significant Sri Lankan Shareholders are HNB (2.61%), NDB ESOP (2.52%) and Mr. A.K. Pathirage, the bank's Deputy Chairman (2.11%). Asiri Hospital Holdings with which Pathirage is connected has 1.47% and the DFCC Bank 1.25%.

The 2012 profit was an all-time record for the NDB with the earnings per share up to Rs.55.31 from Rs.15.79 a year earlier.

The directors of the bank are: Messrs. Hemaka Amarasuriya (Chairman), A.K. Pathirage (Deputy Chairman), Russell de Mel (CEO), T.L.F. Jayasekara, D.S.P. Wickramanayake, Mrs. K. Fernando, H.A. Siriwardena, Ms. G.D.C. Ekanayake and S. Rajapakse.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=75395

Mar 24, 2013 (LBT) - Private equity will be the key focus area for fund-based activities going forward, according to 2012 annual report of the NDB Capital Holdings Plc, (NCAP) and the company expects that given the increased scale and diversity of business enterprises, there would be a healthy demand for private equity in the country.

‘NCAP plans to set up a private equity management company and float a private equity fund with the technical assistance from reputed foreign partners. In addition, the company would also take direct private equity exposures’, the report said disclosing its future outlook.

The annual report also noted that other funded exposures would include listed equalities, fixed income securities, fixed income unit trusts and hybrid securities such as convertibles and preference shares.

‘We also actively explore the opportunities as the stock market becomes conductive for larger public issues. The exposure to above discussed investments would be subject to an asset allocation policy which is closely monitored by the investment committee’, the report pointed out, adding that the NDB Investment Bank (NDBIB) would play an important role in the business growth of the group.

The report also said that, “The special concessions granted by the 2013 Budget to develop the corporate bond market has created a lot of enthusiasm for corporates to issue listed debentures. In addition, a number of large companies are preparing to go public via the listing of their ordinary shares with the tax concessions announced in the Budget. NDBIB as the market leader is ideally placed to capture these opportunities and had already been mandated by some of the leading blue-chips in the country. Leveraging our strategic partnership with DBS bank of Singapore, other prospective avenues are being explored for foreign currency fund raising for banks and corporates”’.
http://lbt.lk/news/business/3976-private-equity-is-key-focus-area-says-ncap