Big Squeeze

LB Finance is tapping the capital markets to raise Rs. 200 mn by securitising its Rs. 1.1 bn leasing portfolio.
The 33-year old company secures nearly 70 percent of its revenues by offering leasing facilities endash mainly to the vehicle segment.rn

rnThe firm says its Rs. 2.0 bn deposit base, is hard pressed to feed its growing leasing business.rn

rnldblquote Most of our deposits these days are for a two-year period, because the interest rates are low. But a four-year lease starts paying back the capital within two-years, so we are opting for a two-year securitisation paper,
dblquote Sumith Adhihetty, LB Finance Managing Director told Lanka Business Online.rn

rnThe firms leasing package is priced at between 18 percent to 23 percent, and Adhihetty says business is growing as the economy picks up.rn

rnLB Finance, which saw its net profits surge 478 percent to Rs. 8.77 mn for the quarter ending Sept. 30, hopes to touch Rs. 50 mn during the financial year 2004/5.rn

rnldblquote Last year was pretty good and unaudited figures have indicated our net profits are just under Rs. 20 mn,
dblquote says Adhihetty.rn

rnWhile leasing is their bread and butter, pawn broking comes next, accounting for 20 percent of its revenues. The balance revenues come from real estate and fee based income.rn

rnLB Finance is the only finance company to offer pawn broking facilities, and this portfolio had grown to Rs. 345 mn as at end 2003.rn

rnldblquote Business is booming,
dblquote says Adhihetty, ldblquote our rates are priced at around 18 percent. But we beat off competition by offering cash on the spot.
dblquotern

rnThe firm operates 17 units in Colombo and most customers require funds for shorter periods ranging from a fortnight to a month.rn

rnSince starting off in the early 1970s LB Finance ownership is currently vested with upcoming business tycoon Dhammika Perera.rn

rnThough quoted on the Colombo Stock Exchange, Perera owns over 73 percent through his firm, Valliable Holdings.rn

rnPereras other investments include Royal Ceramics, Connaisance Holdings, Didul Power, Zyrex Power and Hotel Reefcomber Limited.rn

rn

-Mel Gunasekera: melg@vanguardlanka.comrn