AAFL plans to raise 300 million rupees with the issue of 120 million shares which amounts to a 21 percent stake and has the option of issuing 50 million more shares, going up to a 27.8 percent stake, to raise a total of 425.4 million rupees.
Asia Asset Finance, formerly known as Finance and Land Sales, made a net profit of 79.7 million rupees for the year to March 31, 2011 compared with a loss of 84 million rupees the previous year.
Earnings per share were 30 cents against a loss of 1.58 rupees the year before.
Forty percent of the IPO is reserved for retail individual investors, 20 percent for non-retail investors, 10 percent for unit trusts, five percent for employees of Asia Capital and its subsidiaries, 10 percent for depositors of AAFL and 15 percent for shareholders of Asia Capital.
Mano Nanayakkara, managing director of AAFL and chairman of Asia Capital which bought the finance firm in 2004 and re-structured it, said he expects the company to grow fast given opportunities in the post-war economic recovery.
The IPO is to comply with a regulatory requirement to list and raise funds for lending with 90 percent of funds to be used for core lending operations.
AAFL chairman Dayananda Muthukumarana said it aims to rapidly expand its branch network from 10 now to 19 before the end 2012 mostly in the north and east, where the war was largely fought.
The new management managed to revive the firm by focusing on loan recovery, reducing provisioning, and strengthening balance sheet, he told a news conference.
The firm's net interest income had increased and public deposits were growing satisfactorily, he said.
AAFL will focus on new products such as its '360 degrees' concept under which it not only gives credit but links borrowers with each other that could help generate higher revenue for customers to repay loans.
Saminda Weerasinghe, head of research and corporate finance of Asia Wealth Management Company, managers to the IPO, said AAFL is forecast to achieve a 100 million rupee net profit by the end of the 2012 financial year.
New branches have been given a target of breaking even in the first three months and growing profit by 20 percent a year, he said.
The company has plans for securitisation starting in February 2012 to raise 150 million rupees in low cost funds using its hire purchase and leasing portfolio.