Thai listed Group Lease to acquire stakes in microfinance firms in Sri Lanka, Myanmar for $80.67m

Written by Patrick Fisher October 6, 2016 0 comment

October 3, 2016:

Group Lease Plc’s board of directors gave the green light to its subsidiary Group Lease Holding to acquire the stakes in Sri Lanka’s listed Commercial Credit and Finance Plc (CCF) and Myanmar-based BG Microfinance Myanmar (BGMM) for around 2.79 billion baht ($80.67 million). The first deal will be the acquisition of 29.99 per cent interest in CCF from BG Investments (PVT) Ltd., Creation Investments Sri Lanka LLC (Creation SL) and Mr. Stephen L Lafrance Jr for 10.59 billioon Sri Lankan rupee (about $72 million). For the other deal, it will acquire the 100 per cent stake in BGMM from BG Investments (PVT) Ltd, BG International (PVT) Ltd, BG Capital (PVT) Ltd. and Commercial Credit and Finance PLC for $8 million.

“We expect our investments in both CCF and BGMM will create the sustainable growth for our income and profit. Moreover, it will be a good chance for us to learn new know-how of microfinance which will support our future expansion in Cambodia, Laos, Indonesia and Thailand,” Tatsuya Konoshita, director of Group Lease, said. CCF is one of the fast-growing finance companies in Sri Lanka, which provides various services including leasing, deposits, gold loan, micro finance and real estate and land sales.

It posted 11.9 billion Sri Lankan rupees ($80.9 million) in revenue for the fiscal year 2014-15, an increase of 61.4 per cent from the previous fiscal year. The net profit was posted at 2.1 billion Sri Lankan rupees ($14.3 million), up 108 per cent on year. Currently, around 46.5 per cent of CCF’s assets are loans and receivables and 34.5 per cent are leasing business.

Konoshita said that CCF is looking to expand in other industries such as banking and insurance, which could be another synergy for Group Lease in the coming years. In the filing, Group Lease cited that it will potentially have the right of taking over 70 per cent of CCF in the future. Meanwhile, BGMM is one of a few existing licensed microfinance firms in Myanmar where the authorities have no plan to issue more licenses of this business at the moment.

He cited that BGMM has grown rapidly after two years of its operation and Group Lease will inject more capital to scale up the number of branches once the deal is completed. “This is our significant step to enter into the Myanmar market where the population is looking for access to finance and this type of industry is corresponding well to the economic level of the population,” he explained. Group Lease will use both internal cash flow and external sources of fund to fund both acquisitions.

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