July 29, 2013 (LBO) – Nanda Finance Investment Plc, a small finance company that was recently acquired by Bangladesh-based BRAC micro finance group and Sri Lanka’s LOLC group has been placed on positive rating watch on a possible upgrade by RAM Ratings. RAM said the firm was small, lacked of a clear strategic direction.
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“However, given the change in its ownership, it is envisaged that the Company’s future growth strategies would be guided by the new shareholders’ expertise in the financial services sector,” the rating agency said.
“We will
continue to monitor developments in this regard and will take appropriate rating
action in due course.”
Ram Ratings Lanka places Nanda Investments and Finance PLC’s rating on Positive Watch
RAM Ratings Lanka has placed Nanda Investments and Finance PLC’s (“Nanda†or
“the Companyâ€) respective long- and short-term financial institutions ratings of
BB- and NP on Rating Watch, with a positive outlook.
The rating watch was triggered by the recent acquisition of Nanda by BRAC Lanka
Investments Pvt Ltd, a subsidiary of BRAC Bangladesh (“BRACâ€) – a leading
player in microfinance with a global presence in 11 countries – and LOLC Micro
Investments Pvt Ltd (“LOMIâ€), a subsidiary of Lanka ORIX Leasing Company PLC
(“LOLCâ€). On 27th June 2013, BRAC Lanka Investments Pvt Ltd together with
LOMI acquired Nanda with respective stakes of 56.6% and 33.4%.
Nanda’s ratings had been pressured by its miniscule size, lack of clear strategic
direction and weak franchise which had challenged its competitive position in the
Licensed Finance Company (“LFCâ€) industry.
However, given the change in its
ownership, it is envisaged that the Company’s future growth strategies would be
guided by the new shareholders’ expertise in the financial services sector. We will
continue to monitor developments in this regard and will take appropriate rating
action in due course.
RAM Rating Lanka’s Rating Watch highlights a possible change in rating. It
focuses on identifiable events such as mergers, acquisitions, regulatory changes
and operational developments that place a rating under special surveillance by
RAM Ratings Lanka.
Appearance on RAM Rating Lanka’s Rating Watch, however, does not inevitably
mean that the existing rating will be changed. It only means that a rating is
under evaluation by RAM Ratings Lanka and a final affirmation is expected to be
announced.
A “positive” outlook indicates that a rating may be raised while a
“negative” outlook indicates that a rating may be lowered.
A “developing†outlook
refers to those unusual situations in which future events are so unclear that the
rating may potentially be raised or lowered.