By Dinali Goonewardene
Trade Finance and Investment (TFI) will open its Initial Public Offering for subscription on 28 September and aims to double its stated capital when it raises Rs. 120 million.
Sixty seven per cent of its deposit base has been held by directors and the balance 33 per cent by related and known parties and when the company grows its loan portfolio with the capital raised, it will be the first time that it takes its deposit base public.
“The company hopes to increase visibility and its brand image and broaden public share ownership,” TFI Managing Director, L.A.J.F. Morais said.
Twenty million of the proceeds of the IPO will be used to expand the branch network enabling the company generate more customers and expand its deposit base. The company will also expand its head office in Union Place using 1,000 square feet office adjoining its premises.
TFI plans to open two to three branches an year and will begin by opening a branch in Kilinochchi in three weeks time, Morais said. By doing so it will expand its loan book which is 99% tied up in the vehicle sector to micro financing aiding farmers who have been resettled in these areas by providing loans at low interest rates.
The company hopes to tie up 70% of its loan portfolio in the vehicle sector and 30% in micro finance in the future, Morais said. It intends to cater to groups of 10 to 12 people through government agents in providing micro finance loans.
Trade Finance and Investment saw net interest income grow 18% over the same period last year to Rs. 41 million in the four months ending July 2011. Profits in this period grew 50 % to Rs. 32 million. However in the year ending 31 March 2011 interest income declined .04 % to Rs. 134 million as interest expenses rose 9% to Rs.37 million.
Profits in the year ended 31 March grew 29% to Rs. 63 million. The company’s net asset value per share is Rs.7.90. Annualised earnings per share for 2011/12 is Rs. 3. The company’s return on capital employed in FY 2010/11 was 16.4 %.
TFI will issue six million shares at Rs. 20 and has not pre sold below the IPO price. “Recently some foreign parties had bought in at Rs. 24 per share,” Managing Director Morais said.
Trade Finance and Investment was incorporated in 1978 under the umbrella of the J.L. Morrison and Sons Ltd. group and was thereafter converted to an unquoted public company in 1990. N.G.H. Cooray, the former Chairman of the Jetwing Group, acquired a 93% stake of the company in 1990.
The company has been in operation for 33 years and has a staff strength of 25. Among its key directors are Hiran Cooray, Shiromal Cooray, L.A.J.F. Morais, Ajith Fernando and M.I. Furkan and its Chairman is H.R. Peiris.