Most finance firms keen to merge, not sell
Most small finance companies, under the Central Bank’s new merge or sell policy, don’t want to sell but are eyeing opportunities to merge with strategic partners, according to industry sources.
“We’re already in discussion with about six different companies to merge – not to sell,” a CEO of a medium sized finance company told the Business Times. He added that many small timers were also approaching their larger counterparts.
In line with the recent budget proposal where small finance companies are to be merged reducing the number of finance companies to 20 from a current 58 and strengthening at least five Sri Lankan banks to double their assets to Rs. 1 trillion from a current Rs. 500 billion, most large finance firms will be discussing with their smaller counterparts to acquire them.
Next week some firms which have less than Rs. 8 billion in assets will be meeting a Central Bank team, tasked with the consolidation process, with their suggestions and for further discussions, the CEO said.
He said that directors of some medium sized finance firms were planning to infuse capital in a bid to make them attractive for mergers. Industry sources said that one specialised finance company had successfully negotiated to change hands and that the sale would be announced shortly.