HNB Finance first IPO since January 2018

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HNB Finance Limited, a licensed finance company has obtained approval from the Colombo Stock Exchange to list its voting and non-voting ordinary shares.

The ordinary voting shares will be listed by way of an IPO via an Offer for Sale of 10mn shares at a price of Rs. 5.70 per share while the ordinary non-voting shares will be listed simultaneously via an introduction of a reference price of Rs. 4.20 per share. Thereby, the Company will start trading at a total market capitalization of Rs. 9.35 bn immediately after listing of ordinary voting shares and ordinary non-voting shares.

HNB Finance Limited, is a subsidiary of Hatton National Bank PLC, which owns 51% of the ordinary shares whilst 39.57% of the ordinary shares is owned by Prime Lands (Pvt) Limited. Being the pioneer in microfinance in Sri Lanka, HNB Finance Limited is acclaimed for its contribution to the microfinance industry. The efforts of HNB Finance are validated through prestigious recognitions such as Asia’s Best Workplaces in 2019 and the Runner up at National Business Excellence Award under Non-Banking and Financial Services Sector are few of the many accolades added to the company in the year 2019.

The preamble to the present share ownership structure is as follows.

In 2011, Prime Lands acquired the major shareholding of the ailing finance company through a restructuring plan put forth by Prime Lands (Pvt) Limited which was approved by the Central Bank of Sri Lanka. The company was rebranded as Prime Grameen. Despite the distressed nature of the Company at the time of acquisition an impressive turn around was achieved within two years through the prudent management of the company by a team of senior professionals and guided by the business acumen of Prime Lands. The senior management displayed their commitment to the task by making the company profitable within a few years post the acquisition.

In 2015 Hatton National Bank PLC acquired 51% of the company and the Company was renamed HNB Grameen Finance Limited.

In 2017 DWM Funds (Developing World Market) S. C. A. SICAV SIF, a PE fund, registered in Luxembourg and managed from Singapore acquired 7.93% of the company. The fund has significant exposure and expertise in the micro finance industry and is expected to add value to the company.

In 2018, the Company was renamed as HNB Finance Limited, poised to benefit from the relationship with the parent entity Hatton National Bank PLC.

With the strong backing of aforestated shareholders the company has gained significant market share and has established itself as a well-respected finance company. As a subsidiary of banking giant Hatton National Bank PLC, HNB Finance is at a most advantageous position being able to leverage on the strength, stability and strong brand value of the parent. Hatton National Bank PLC also provides strategic direction and guidance at a macro level to HNB Finance. The company has now built on the solid foundation and diversified into other segments of the markets through innovative products and superior service.

In December 2019, the company issued debentures after obtaining a listing of the debentures on the Colombo Stock Exchange amounting to Rs. 1.16 bn in order to comply with the tier II capital requirement and to expand its loan portfolio.

The IPO is the first in 2020 and is expected to be well received by the market. The issue opens on the 17th of February 2020. Acuity Partners (Pvt) Ltd who were the Managers of the last IPO in January 2018 for LVL Energy Fund PLC, will be functioning as Manager and Financial Advisors for this IPO too.