Muthoot Finance acquires controlling stake of Asia Asset Finance
October 25, 2014, 3:54 pm
Muthoot Finance Ltd., one of the largest gold financing companies operating on a global scale whose Head Office is based in Kerala, India, made its first investment in the Sri Lankan market with the acquisition of controlling stake of Asia Asset Finance PLC, widely known as one of the oldest finance companies in Sri Lanka.
In August, Muthoot acquired 29.98% equity stake in Asia Asset Finance for US$ 2.1 million from Asia Capital PLC, a significant shareholder of Asia Asset Finance, through a Colombo Stock Exchange (CSE) transaction.
It has now acquired over 240 million more equity shares in Asia Asset Finance at a price of Rs. 1.60 per share for LKR 384 million as part of a Rights Issue. With this, the total shareholding of Muthoot in Asia Asset Finance has risen to 44.32%.
Muthoot Finance currently operates through over 4,400 branches in India, offering services in gold loans, money transfers, wealth management services, foreign exchange and many other diversified services such as travel and tourism. With strong investments in the UK, US, and the UAE, the company now believes that the economy of Sri Lanka is primed for investment by its stability and strategic positioning.
After the successful completion of the Rights Issue, Muthoot Finance is now the major shareholder of Asia Asset Finance, primarily offering finance services for personal and corporate requirements. The company has a widespread branch network throughout the country in Colombo, Negombo, Gampaha, Wennappuwa, Batticaloa, Jaffna, Kilinochchi, Moratuwa, Kalutara, Kurunegala and Galle.
Speaking on the acquisition, Rajiv Gunawardena, Chief Executive Officer of Asia Asset Finance stated, "The management of Asia Asset Finance strongly believes that the relationship formed with Muthoot Finance will take the company to greater heights and help achieve new milestones. We are pleased with the strategies discussed with Muthoot Finance and plans are already in the making to make Asia Asset Finance one of the Top Finance Companies in Sri Lanka."
"As a pioneering finance company, already well-established in the Sri Lankan Market, Asia Asset is on an upward trend that can only profit further with the added expertise and synergies of Muthoot Finance, which has over 125 years of experience and knowledge in the industry," Gunawardena said.
He said that with the combination of these resources, the company expects to expand the branch network and products within the course of the coming year.
Commenting on the recent success of the rights issue, Roshan De Silva Gunasekara, General Manager of Asia Asset Finance stated, "The success of the takeover is clearly indicated by the fully subscription of the rights issue, we believe that the performances of the next six months will be further improved with the strength and synergies of the new shareholders."
"Asia Asset Finance is also geared to enhance the company’s operating activities by using the latest technologies available to introduce more innovative products and create better synergies within the organization. Thus, we believe that our shareholder investor confidence will be justified with the performance and with the future activities of the company," he added.
He said that the former major shareholder, Asia Capital, also continues to have a strategic position in Asia Asset Finance, believing in the strengths and the future performance of the company.
With its beginnings in 1887 in India, Muthoot Finance has the world’s biggest gold reserve and is India’s largest gold financing company. The company has succeeded in establishing itself as a vast conglomerate that provides specialized services in 16 diverse fields such as Finance, Leisure and Tourism, Education, Healthcare and many others.
Muthoot Finance has over 6 million loan accounts in its loan portfolio and serves 80,000 customers daily. The company has deployed 25,000 people in over 4,400 branches spread over 21 states and four Union Territories across India. The company’s fame is further enhanced by its love for sports, which was clearly indicated by its sponsorship of the Indian Premier League (IPL) series.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=112794
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