Sampath Bank bought up Rs. 400 million worth of securitised paper on Wednesday locking up returns up to four years. Sampath Bank bought up Rs. 400 million worth of securitised paper on Wednesday locking up returns up to four years. People’s Leasing Co. (PLC) which issued the lease-backed securities, also picked up a Rs. 150 million revolving credit facility from Sampath Bank to fund its monthly vehicle import bill.
With a Rs. 15 billion portfolio, PLC is currently Sri Lanka’s biggest leasing companies commanding a 17 percent market share.
The four-year securitised paper is structured in a way that, interest rates are fixed for notes with tenures falling within the first two years, while a variable rate (average weighted prime lending rate plus) is applicable for the balance two years.
“We (PLC) raised Rs. 500 million through securitisation in May this year, with this Rs. 400 million we can box on for another quarter,” PLC’s Deputy Manager (Finance) Udesh Gunawardena told LBO on Thursday.
Last year, PLC raised Rs. 2.5 billion through securitising its illiquid lease rental receivable portfolio.
Besides offering traditional forms of leasing, PLC has carved a niche in the bus leasing business.
Since 1996, the firm has muscled its way into the vehicle importing business, bringing down some 5,000 buses in the process.
“For a month, we import around 50-60 buses, mainly 52 seaters from India. We also import some cargo trucks,” says Gunawardena.
The import business however, does not dry up PLC’s finances like other importers, as it finds ready buyers through its leasing business.
“Buses account for some 40 percent of our total portfolio. We have a strong average recovery rate of 95 percent, with a non-performing portfolio of 4.67 percent is one of the lowest in the industry,” he said.
For the fiscal year ended March 31, 2005, PLC made a net profit of Rs. 310 million (up 38 percent) after making a Rs. 437 million general provisioning.
-LBO Newsdesk: LBOEmail@vanguardlk.com