SANASA Development Bank PLC (SDB bank) shareholders consent has been given at an Extraordinary General Meeting held recently to enable SBI/FMO Fund and IFC, a member of the World Bank Group, to invest a total of US $ 22 Mn. (Rs. 3.3 Bn.) in the Bank. Regulatory approvals for these substantial investments have already been secured. SDB bank is the 1st Licensed Specialized Bank to respond with an immediate strategy to expand its Capital to meet regulatory requirements.
The new investment will increase IFC`s stake in the Bank to 8.9% making them the 4th largest shareholder to date. IFC has been a long-term partner of SDB bank since 2009 and is currently supporting the bank’s expansion to include more micro and small businesses, co-operatives, and retail clients. This will help the Bank to reach more small businesses across the country, boosting financial inclusion.
FMO is a Dutch Development bank. It is their mission to empower entrepreneurs to build a better world. FMO has an AAA rating with a stable outlook from both Fitch and Standard & Poor’s. It is a public-private development bank supervised by the Dutch Central Bank (DNB) with a clear governance structure and reporting lines. FMO offers a dedicated facility to Financial Institutions to be on-lent to women-owned SMEs. Besides long-term finance for these businesses, they also provide technical assistance to support Financial Institutions and female entrepreneurs. The SBI-FMO Emerging Asia Financial Sector Fund Pte. Ltd. (SBI-FMO Fund) is a growth strategy private equity investment fund based in Singapore which invests in Financial Services and Fin Tech sectors across Asia.
The Fund leverages on the combined strengths of the Fund’s sponsors, SBI Group, a leading internet-based financial services conglomerate in Japan, and FMO Dutch Development Bank. The SBI Holdings Group is the leading online financial services conglomerate in Japan and one of the best performing Japanese Private Equity/Venture Capital Asset Managers with an AUM in excess of USD 5 Bn.
FMO and SBI-FMO Fund will jointly take up 12.9% equity stake in the Bank. This breakthrough partnership will boost the Capital Base of the Bank to be well within the regulatory limits.BIn addition to the infusion of equity FMO and SBI-FMO Fund will also jointly extend long-term Tier-2 funding of US $ 6.5 Mn. (LKR 1 Bn. approx.) to support new business opportunities including SME lending, Cooperative & Retail Sector.
The Bank has already made a substantial investment in organization realignment, strengthening and improving systems and processes, and is shifting to a digitalized environment with strong capabilities across these main business segments.
The GM/CEO Nimal C Hapuarachchi states that “With this new infusion of capital and long-term funding, we will consolidate on gains of past performances and proactively respond to future market requirements, in order to deliver strategic objectives”.
The Chairperson Samadanie Kiriwandeniya states that “We are well geared both strategically and operationally to undertake the next phases of our journey. We have become a more focused business, striving for long-term, responsible growth that will amalgamate profitability with nation`s development”.
The Chairperson further added “SANASA Development Bank which is a product of the pioneering Micro Finance Movement in Sri Lanka has been branded in the market over 20 years, as a leader in the Micro Finance industry. However, recent market studies and our own engagements with the customers led us to realize that our customers are ready to expand their frontiers and enter into real wealth creation.”
“IFC’s long-standing partnership with SANASA is providing more formal financial services to under-served segments within rural micro and small businesses across Sri Lanka,” said Amena Arif, IFC Country Manager for Sri Lanka and the Maldives. “This investment will help the bank further extend their reach across the country.”
Suramya Gupta, the Fund Manager for SBI-FMO Fund stated that “We are honoured to have partnered with SANASA Development Bank in Sri Lanka. SANASA is a 100-year-old movement touching the lives of a large section of Sri Lanka`s population.”