The John Keells Holdings (JKH) has banking consolidation ideas in the longer term, if its Expression of Interest (EoI) for Seylan Bank is successful, according to JKH officials.
The investor relations team at JKH told The Sunday Times FT in a statement that JKH has submitted an EoI to the Central Bank’s (CB) call to become a strategic partner for Seylan. Six parties, including NDB, Sampath Bank and LOLC, have submitted an EoI for the Seylan Bank stake. The CB said earlier it planned to announce on Friday, April 24, those eligible from this list who can make a final bid.
When asked what the rational was to sent an EoI as the conglomerate already owns a major share in Nation’s Trust Bank, JKH said, “Financial services is one of our core sectors and we are constantly on the look out for good investment opportunities. Following the due diligence, we may make a final bid if we believe that Seylan Bank is an attractive investment opportunity that meets our return hurdles and other investment criteria. We would look at consolidation opportunities in the longer term,” it said.
Analysts said JKH will benefit from Seylan if their bid is successful because Seylan has a large branch network. “Nation’s Trust at present lacks a branch network. If JKH can acquire Seylan’s 33 1/3% as stipulated by CB, they can benefit from Seylan’s branch network,” an analyst said. However they said that the new investor for Seylan Bank will not benefit immediately from this investment, as there will be a dilution of the value of the shares, the analyst said.
"As there is fresh capital raised, there will be a dilution on Seylan shares which could reduce the earning capacity per share," he said.
A stockbroker shared these sentiments but said it is a good opportunity because with good expertise this bank can be turned around in three to four years. |
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