Norfund to become largest shareholder in NDB
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At the signing of an agreement between NDB and Norfund: NDB Chairman Eshana De Silva, NDB CEO Dimantha Seneviratne (centre) and Norwegian Ambassador Trine Jøranli Eskedal.
Norfund, the Norwegian Investment Fund for developing countries owned and funded by the Norwegian Government, will be the largest shareholder at National Development Bank PLC (NDB) by April, after the bank’s Rights Issue.
The two inked a deal on Friday where Norfund will invest up to 9.99 per cent (Rs. 3 billion) in the bank which is its first equity investment in the country and is slated to participate in the Rs. 8 billion Rights Issue by subscribing to unsubscribed rights and also by a private placement if required.
This investment is subject to other conditions, including regulatory and shareholders’ approvals.
This equity infusion together with the proposed Rights Issue will help buttress the Tier I capital of NDB Bank enabling it to continue its growth momentum and support the economic revival in a post COVID environment. The Private Placement is priced at a 10 per cent premium to the Rights Issue at Rs. 82.5 per share.
Norwegian Ambassador to Sri Lanka Trine Jøranli Eskedal, speaking at the event, said Sri Lanka was added to Norfund’s list of mandated countries in 2019. Norfund is the Government´s most important tool for strengthening the private sector in developing countries, and thereby for reducing poverty.
The investment comes at a time when international rating agencies have downgraded Sri Lanka’s credit rating which shows that Norfund endorses NDB’s resilience in a challenging environment and alignment to international standards, NDB Chairman Eshana De Silva said. “Norfund’s decision to invest in NDB shows the confidence they have in NDB and the Sri Lankan economy.”
Dimantha Seneviratne, Group CEO NDB said that a DFI such as Norfund seeks to support the SME sector in reviving the economy. Norfund will not only invest in equity but also explore funding lending opportunities in the renewable energy and small and medium enterprises sector along with technical knowhow, Mr. Seneviratne told the Business Times on the sidelines of the media briefing.