Financial Times

Janashakthi selling part of NDB stake?
Speculation in rife about Janashakthi Insurance selling a possible excess stake at NDB to a foreign buyer believed to be a GoldQuest-connected party in Malaysia, while forming a cartel with them and two other parties to control the bank, brokers said.

Janashakthi now owns 17.5 percent of NDB, of which 7.5 percent was disputed by the Central Bank when it came under the Banking Act in July last year (which limits bank stakes to a maximum 10 percent) with the merger between NDB Bank and National Development Bank. The issue is before court.
A stock broker said NDB presents the best combination of both commercial and development banking, which if managed properly will present a challenge to the commercial banks in the country. “There is speculation that Janashakthi wants to control the bank by forming a cartel with Capital Alliance, Renuka Group and the Malaysian party, because of this reason,” he said.

Chandra Shafter, Chairman, Janashakthi said that because the stake involved in the matter is very large the company will not divulge its next move. “The stake involved is very large and even if we are going to sell it we will not talk about it,” he said. He declined to comment further.

Brokers said if NDB sells the disputed amount, they will make big capital gains, but it is highly unlikely that they will completely let go of NDB, because it has large cash reserves of Rs.25 billion in treasury bills and also as cash.

Renuka holds around 10 percent while Capital Alliance, a local fund management firm, has nearly 4 percent in NDB. GoldQuest, a controversial multilevel marketing company, has a 10 percent stake. The government together with the Bank of Ceylon, the Treasury and ETF has 21 percent.

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