HNB Finance, the licensed finance company subsidiary of Hatton National Bank, plans to raise Rs. 2.5 billion through a rights issue to strengthen its capital adequacy ratio, the company disclosed in a stock exchange filing on Friday.
The issue will offer two new ordinary voting shares for every nine existing voting shares held at Rs. 5.50 each, and two new ordinary non-voting shares for every nine existing non-voting shares at Rs. 5.00 each. A total of 381,667,019 new voting shares and 80,072,222 non-voting shares will be issued.
The Central Bank of Sri Lanka has approved the issue, with Colombo Stock Exchange and shareholder approval still pending. Trading of HNB Finance stock (HNBF.N0000 and HNBF.X0000) has been halted pending the disclosure.
The funds will be used to improve the company’s capital adequacy ratio and for lending purposes, HNB Finance said.
The rights issue is the latest in a series of capital-raising exercises by Sri Lanka’s non-bank financial institutions as the sector responds to the Central Bank’s push for consolidation and stronger capital buffers. CBSL Governor Weerasinghe has warned of mandatory mergers within two years if voluntary consolidation fails.
Other recent NBFC capital raises include Vallibel Finance’s Rs. 2.12 billion rights issue, People’s Leasing’s Rs. 10 billion Tier 2 capital, and Siyapatha Finance’s Rs. 3.75 billion debenture listing.
