SL firms successfully grow in alien lands
By taking products or services international, a Sri Lankan business is replicating its model for another set of circumstances, a different locale and culture, with a different market, demands, needs and expectations.
At least nine companies and banks from Sri Lanka have manoeuvred unchartered waters like this, quite successfully.
The LOLC Group has by far been the most triumphant at imprinting its mark on foreign soil and flying the Sri Lankan flag. They bought into PRASAC, the Cambodian micro finance firm in 2007 with an 18 per cent stake at the invitation of FMO the Nederland Government’s Development Finance Company – Belgian Investment Company for Developing Countries and Dragon Capital. In less than a decade the company raised the holding by 52 per cent. Then in a US$ 603 million deal last April, LOLC sold 70 per cent of PRASAC to Kookmin Bank.
The group’s other microfinance company in Cambodia, LOLC Cambodia holds in excess of US $ 1 billion in total assets, a US $ 832 million portfolio and a deposit base of US $ 485 million.
LOLC already has similar operations in Myanmar, Indonesia, Philippines and Pakistan. It plans to expand into Africa, Brazil and India.
LOLC related firm, Browns acquired 66.67 per cent stake of Sunbird Bioenergy (SL) Ltd which holds not only this plant with the perennial true grasses in the region of Makeni, in Northern Sierra Leone but with it also came a 32 Mega Watt (MW) Biomass renewable energy power plant.
LOLC is now expanding its global presence further in Cambodia with the latest approval received to set up micro insurance under the company, Serendib Micro Insurance PLC. LOLC has also received preliminary approval to set up a representative office in Myanmar, to implement its Micro Insurance business.
Sometimes the home country has a very limited market (due to small size of the country itself, for example) so the only way to grow is to go abroad and sell in other countries – as shown by John Keells Holdings PLC (JKH), one of the first companies to venture out. In 1996 Velidhu Resort Hotel, an 80 roomed island resort in the Maldives was acquired making it JKH’s first major overseas investment. JKH went onto lease three more island resorts in the Maldives.
Firms aiming to go abroad make acquisitions that maximise expected value, even at the expense of lowering near-term earnings, one analyst noted. Entering foreign markets is always full of challenges for any type and size of business, however, potential opportunities for success at foreign markets are also huge, he added.
Another Sri Lankan conglomerate, the Aitken Spence entered the Maldivian hotel sector in 1993 with its investment in Bathala Island Resort. Aitken Spence is also the largest foreign resort operator in the Maldives with eight resorts and is among the five largest resort operators in the country. Aitken Spence also currently owns one hotel and manages five hotels in Oman. It opened Turyaa Chennai on 1 October 2015 and is located in the IT Corridor of Chennai and just a short drive away from the heart of the city, securing a hotel in India.
Commercial Bank (ComBank) started its operations in Bangladesh by acquiring the banking business of Credit Agricole Indosuez in November 2003 with two branches and two booths.
Since commencement, ComBank has established its position well above the other regional banks operating in the country expanding the branch network to 11 branches with eight in Dhaka, one each in Chittagong, two specialised Off-shore Banking Units in Dhaka and six SME centres in Dhaka. ComBank opened its representative office in Yangon in June 2015, becoming the first Sri Lankan Bank to be granted a license by the the Central Bank of Myanmar. It entered into a joint venture with Tree Top Investments Maldives, inaugurated its banking operations in the Maldives in 2016, with the opening of its head office and the first branch in the Maldives’ capital Malé.
Multinational and diversified conglomerate, Hayleys has manufacturing facilities in Indonesia and Thailand and marketing operations in Australia, India, Bangladesh, Italy, Japan, and Netherlands, UK and the US and its products are sold in 80 countries.
MAS Holdings, which has extensive operations in the South Asian region, became the first Sri Lankan apparel group to commence manufacturing in the US by acquiring the business operations of Acme McCrary Corporation, established in North Carolina, in 2017.
Apparel manufacturer, Brandix Apparel has branches in India, Bangladesh, and the US.
Since the population number is limited, the size of demand would be also limited, thus businesses are force to look out for more people to which they can sell more. Hemas is one of the Sri Lankan firms that have tapped markets in South Asia. Hemas Holdings PLC, a conglomerate in FMCG, healthcare, leisure, transportation and new ventures, has continued to develop solutions and products for the consumer in Sri Lanka while also moving into the Asian region from Bangladesh to Thailand.
In the meantime, start-ups and companies in Sri Lanka’s IT sector have also opened offices and operations in other countries.