MicroHoldings plans to raise the money from private investors and pay for the investment in cash over the next six months. Shareholders of the local company will also receive warrants in MicroHoldings exercisable after two years, MicroHoldings said in a statement Tuesday.

Set up in 1995, MicroCars assembles and manufactures about 35-40 cars per month with capacity to scale up production to around 600 units each month.

The firm's labour intensive plant turns out sedans, coupes and minivans. The sedan and coupe sell for about 5,000 dollars each, while the minivan carries a 10,000 dollar price tag.

The company also assembles a Sports Utility Vehicle (SUV) under license to a Korean carmaker Sanyan, which sells for around 40,000 dollars per unit.

"MicroCars has achieved a high level of success in Sri Lanka and has a lot of room to grow in the coming years," said Jeffrey Flannery, CEO MicroHoldings US, Inc.

"At the sametime, its unique manufacturing and assembly operation is a model that we believe can be successfully replicated in other developing countries. We look forward to helping MicroCars expand and succeed in both Sri Lanka and around the world," he said.

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