LOLC Ceylon Holdings Limited

ICRA Lanka assigns the Provisional [SL]A(CE) rating with Stable outlook to the proposed Guaranteed Redeemable Debentures Programme of LOLC Ceylon Holdings Limited

InstrumentRated Amount (LKR Mn)Rating Action
Guaranteed Redeemable Debentures Programme1,000Provisional [SL]A(CE) with Stable outlook; assigned

Rating action

ICRA Lanka Limited has assigned the Provisional [SL]A(CE) (pronounced SL A Credit Enhancement) rating with Stable outlook to the proposed LKR 1,000 Million Guaranteed Senior Listed Redeemable Rated Debenture Programme of LOLC Ceylon Holdings Limited (LOLC Ceylon or the Company). The letters CE in parenthesis suffixed to a rating symbol stand for Credit Enhancement. A CE rating is specific to the rated issue, its terms, and its structure. The CE ratings do not represent ICRA Lanka’s opinion on the general credit quality of the issuers concerned.

The rating for the Guaranteed Senior Redeemable Debentures is based on the strength of the unconditional and irrevocable guarantee from LOLC Holdings PLC (LOLC) (rated SL A with Stable outlook by ICRA Lanka) covering the principal and two interest instalments (annual) of the proposed issue. The guarantor undertakes the obligation to pay, on demand from the Trustee, LKR 1,000 Million, being the total principal sum, and two-yearly interest instalments of the proposed Guaranteed Senior Listed Redeemable Debentures. The rating also assumes that the guarantee will be duly invoked by the Trustee, as per the terms of the underlying trust deed and the guarantee agreement, in case there is a default in payment by LOLC Ceylon (Issuer).

The Provisional rating is subject to the fulfilment of all conditions under the structure and review of all the final documentation pertaining to this transaction by ICRA Lanka.

About the Company:

LOLC Ceylon Holdings Limited (LOLC Ceylon) is a fully-owned subsidiary of LOLC Holdings PLC (LOLC). Upon listing, the shares owned by LOLC in its Non-Banking Financial Institutions (NBFIs) namely; LOLC Finance PLC (44.79%), Commercial Leasing and Finance PLC (98.92%) and LOLC Development Finance PLC (55.55%) will be transferred to LOLC Ceylon.

Guarantor Profile:

LOLC Holdings PLC

Setup in 1980, LOLC Holdings PLC has evolved itself from a financial services provider to a holding company which also has interests in manufacturing, trading, plantations, leisure and energy. The group has diversified geographically into Cambodia, Myanmar, Indonesia, Pakistan, Maldives and in the African region. On April 13, 2020, LOLC Group has divested 70% of its stake in PRASAC for a total consideration of about USD 603 Mn. The investment was held by LOLC International Private Limited (LOLCIPL), a fully owned subsidiary of LOLC holdings, incorporated in Singapore.

During FY2020, LOLC group reported a consolidated PAT of LKR 19.8 Bn on a total asset base of LKR 1,336 Bn, as compared to the PAT of LKR 19.6 Bn on a total asset base of LKR 1,044 Bn. For the 9M ended December 31, 2020, the group reported a PAT of 45.3 Bn, including a gain of LKR 42.9 Bn on PRASAC divestment. The consolidated asset base has moderated following the above divestment. LOLC PLC reported an asset base of LKR 820 Bn as on December 31, 2020.

Key financial indicators of LOLC Holdings PLC
In LKR MnFY2019FY20209MFY2021*
Net Interest Income[1]53,90462,17427,621
Profit after [2]Tax19,63619,79245,326
Reported net worth152,220212,577225,042
Loans and Advances707,278897,447397,332
Total Assets1,043,7471,335,919819,957
Return on Equity14.56%10.85%27.62%
Return on Assets2.10%1.66%4.28%
Gearing (times)5.55.02.4
*Unaudited Financials   
Rating history for the last three years:
Analysts
Sachini Costa
+94-774781595
sachini.costa@icralanka.com  

Sahil Udani
+91-22-61143429
Sahil.udani@icraindia.com

[1] Including discontinued operations

[2] PAT for 9MFY2021 includes the capital gain of LKR 42.9Bn from the disposal of PRASAC Microfinance Institution Limited


Disclaimer
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Subsidiary of ICRA Limited

A Group Company of Moody's Investors Service

CORPORATE OFFICE
Level10, East Tower, World Trade Center, Colombo 01, Sri Lanka
Tel:+94 11 4339907;Fax:+94112333307 Email:info@icralanka.com; Website:www.icralanka.com

© Copyright, 2021 ICRA Lanka Limited. All Rights Reserved. Contents may be used freely with due acknowledgement to ICRA Lanka.

ICRA Lanka ratings should not be treated as recommendations to buy, sell or hold the rated debt instruments. ICRA Lanka ratings are subject to a process of surveillance, which may lead to revision in ratings. An ICRA Lanka rating is a symbolic indicator of ICRA Lanka’s current opinion on the relative capability of the issuer concerned to timely service debts and obligations, with reference to the instrument rated. Please visit our website www.icralanka.com or contact ICRA Lanka’s office for the latest information on the outstanding ICRA Lanka ratings.

All information contained herein has been obtained by ICRA Lanka from sources believed by it to be accurate and reliable, including the rated issuer. ICRA Lanka however has not conducted any audit of the rated issuer or of the information provided by it. While reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of any kind, and ICRA Lanka in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information.

ICRA Lanka does not take any responsibility for accuracy of material/documents prepared or published by other parties based on this document. All ICRA Lanka official rating rationales are prepared in English and external parties may present or publish translated versions of the same. Readers are henceforth advised to refer to the ICRA Lanka’s official rating rationale in the event of any inconsistency found in such documents.

ICRA Lanka or any of its group companies may have provided services other than rating to the issuer rated. All information contained herein must be construed solely as statements of opinion, and ICRA Lanka shall not be liable for any losses incurred by users from any use of this publication or its contents.

LOLC Ceylon Holdings Limited

ICRA Lanka assigns the Provisional [SL]A(CE) rating with Stable outlook to the proposed Guaranteed Redeemable Debentures Programme of LOLC Ceylon Holdings Limited

InstrumentRated Amount (LKR Mn)Rating Action
Guaranteed Redeemable Debentures Programme1,000Provisional [SL]A(CE) with Stable outlook; assigned

Rating action

ICRA Lanka Limited has assigned the Provisional [SL]A(CE) (pronounced SL A Credit Enhancement) rating with Stable outlook to the proposed LKR 1,000 Million Guaranteed Senior Listed Redeemable Rated Debenture Programme of LOLC Ceylon Holdings Limited (LOLC Ceylon or the Company). The letters CE in parenthesis suffixed to a rating symbol stand for Credit Enhancement. A CE rating is specific to the rated issue, its terms, and its structure. The CE ratings do not represent ICRA Lanka’s opinion on the general credit quality of the issuers concerned.

The rating for the Guaranteed Senior Redeemable Debentures is based on the strength of the unconditional and irrevocable guarantee from LOLC Holdings PLC (LOLC) (rated SL A with Stable outlook by ICRA Lanka) covering the principal and two interest instalments (annual) of the proposed issue. The guarantor undertakes the obligation to pay, on demand from the Trustee, LKR 1,000 Million, being the total principal sum, and two-yearly interest instalments of the proposed Guaranteed Senior Listed Redeemable Debentures. The rating also assumes that the guarantee will be duly invoked by the Trustee, as per the terms of the underlying trust deed and the guarantee agreement, in case there is a default in payment by LOLC Ceylon (Issuer).

The Provisional rating is subject to the fulfilment of all conditions under the structure and review of all the final documentation pertaining to this transaction by ICRA Lanka.

About the Company:

LOLC Ceylon Holdings Limited (LOLC Ceylon) is a fully-owned subsidiary of LOLC Holdings PLC (LOLC). Upon listing, the shares owned by LOLC in its Non-Banking Financial Institutions (NBFIs) namely; LOLC Finance PLC (44.79%), Commercial Leasing and Finance PLC (98.92%) and LOLC Development Finance PLC (55.55%) will be transferred to LOLC Ceylon.

Guarantor Profile:

LOLC Holdings PLC

Setup in 1980, LOLC Holdings PLC has evolved itself from a financial services provider to a holding company which also has interests in manufacturing, trading, plantations, leisure and energy. The group has diversified geographically into Cambodia, Myanmar, Indonesia, Pakistan, Maldives and in the African region. On April 13, 2020, LOLC Group has divested 70% of its stake in PRASAC for a total consideration of about USD 603 Mn. The investment was held by LOLC International Private Limited (LOLCIPL), a fully owned subsidiary of LOLC holdings, incorporated in Singapore.

During FY2020, LOLC group reported a consolidated PAT of LKR 19.8 Bn on a total asset base of LKR 1,336 Bn, as compared to the PAT of LKR 19.6 Bn on a total asset base of LKR 1,044 Bn. For the 9M ended December 31, 2020, the group reported a PAT of 45.3 Bn, including a gain of LKR 42.9 Bn on PRASAC divestment. The consolidated asset base has moderated following the above divestment. LOLC PLC reported an asset base of LKR 820 Bn as on December 31, 2020.

Key financial indicators of LOLC Holdings PLC
In LKR MnFY2019FY20209MFY2021*
Net Interest Income[1]53,90462,17427,621
Profit after [2]Tax19,63619,79245,326
Reported net worth152,220212,577225,042
Loans and Advances707,278897,447397,332
Total Assets1,043,7471,335,919819,957
Return on Equity14.56%10.85%27.62%
Return on Assets2.10%1.66%4.28%
Gearing (times)5.55.02.4
*Unaudited Financials   
Rating history for the last three years:
Analysts
Sachini Costa
+94-774781595
sachini.costa@icralanka.com  

Sahil Udani
+91-22-61143429
Sahil.udani@icraindia.com

[1] Including discontinued operations

[2] PAT for 9MFY2021 includes the capital gain of LKR 42.9Bn from the disposal of PRASAC Microfinance Institution Limited


Disclaimer
ICRA Logo

Subsidiary of ICRA Limited

CORPORATE OFFICE
Level10, East Tower, World Trade Center, Colombo 01, Sri Lanka
Tel:+94 11 4339907;Fax:+94112333307 Email:info@icralanka.com; Website:www.icralanka.com

© Copyright, 2021 ICRA Lanka Limited. All Rights Reserved. Contents may be used freely with due acknowledgement to ICRA Lanka.

ICRA Lanka ratings should not be treated as recommendations to buy, sell or hold the rated debt instruments. ICRA Lanka ratings are subject to a process of surveillance, which may lead to revision in ratings. An ICRA Lanka rating is a symbolic indicator of ICRA Lanka’s current opinion on the relative capability of the issuer concerned to timely service debts and obligations, with reference to the instrument rated. Please visit our website www.icralanka.com or contact ICRA Lanka’s office for the latest information on the outstanding ICRA Lanka ratings.

All information contained herein has been obtained by ICRA Lanka from sources believed by it to be accurate and reliable, including the rated issuer. ICRA Lanka however has not conducted any audit of the rated issuer or of the information provided by it. While reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of any kind, and ICRA Lanka in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information.

ICRA Lanka does not take any responsibility for accuracy of material/documents prepared or published by other parties based on this document. All ICRA Lanka official rating rationales are prepared in English and external parties may present or publish translated versions of the same. Readers are henceforth advised to refer to the ICRA Lanka’s official rating rationale in the event of any inconsistency found in such documents.

ICRA Lanka or any of its group companies may have provided services other than rating to the issuer rated. All information contained herein must be construed solely as statements of opinion, and ICRA Lanka shall not be liable for any losses incurred by users from any use of this publication or its contents.