Talks ongoing on several mergers and acquisition deals in the finance company sector

Cabraal welcomes Softlogic-Abans deal saying “that’s the way to go”

Former Central Bank Governor, Ajith Nivard Cabraal, now State Minister for Money, Capital Markets and State Enterprise Reform Friday welcomed the announcement earlier in the week that the Softlogic Group was acquiring a controlling interest of Abans Finance acquiring approx 33.06 million shares at a price of Rs. 30.10 per share.

Concurrently Abans announced that the transaction, which will be followed by a mandatory offer of the same price to minority shareholders, would earn it a capital gain which was not quantified. Abans Finance has been in business since Aug. 2007 as a registered finance and leasing company and later listed on the CSE in 2011.

“This is a good way to go,” said Cabraal, who as Governor of the Central Bank long advocated the merger of smaller finance companies with the bigger entities. “I am happy to see this happening and would encourage other companies too to follow the example.”

Cabraal said that such mergers and acquisitions would strengthen the entire finance industry where many companies are in distress and others have failed. It would also be a way for the smaller companies, required by the regulator to infuse substantial capital into their businesses, to be able to meet the requirement.

The Central Bank, both during Cabraal’s tenure and later, has been urging this strategy. CBSL initiated a Financial Sector Consolidation Plan in 2014.

Well informed sources said that many companies are in talks to make deals similar to the Softlogic – Abans arrangement but they could not say how soon they would materialize.

“I know of one example for sure and have heard of many other parties that are in talks,” this source said.

Following the acquisition, Softlogic which is also in the finance company business through Softlogic Finance PLC will amalgamate this company with Abans Finance and will remain the surviving entity.

Minority shareholders of Abans Finance will also have the option of swapping their holdings with every six Abans Finance shares qualifying for 11 ordinary Softlogic Finance shares.