People’s Leasing awaits approval to buy First Capital stake
The offer for First Capital by People’s Bank investment arm, People’s Leasing PLC is being pummelled by critics for the premium intended to be paid and the ‘bad timing’ of this transaction.
“First Capital is a primary dealer and so is People’s Leasing PLC. It is beyond us to comprehend how this transaction could add value to People’s Leasing,” Samagi Jana Balawegaya MP Kabir Hashim told the Business Times.
The offer is for People’s Leasing to buy 33 per cent of First Capital at Rs. 5.5 billion. Mr. Hashim said with the stake passing the 30 per cent which triggers the mandatory offer of the Securities and Exchange Commission of the listed First Capital, People’s Leasing will still be a minority shareholder of the entity.
Pradeep Amirthanayagam, Chairman People’s Leasing told the Business Times that the leasing industry his company is in has undergone a lot of stress. “We have had two good years in 2021 and ’22. With the way the industry is going, the board decided that we should look at more investment opportunities. We have only signed a share purchase agreement and no transaction has taken place as yet.” Mr. Hashim added that now with the government strategy of going towards shedding of public entities, People’s Leasing strategy to buy a private company at a premium does not make sense.
Mr. Amirthanayagam said this idea came from the management of the company. “We wanted it evaluated by the People’s Bank and it went to the People’s Bank investment unit to be vetted. Finally it came to the People’s Leasing investment committee who proposed that we go ahead with the offer. Now it is before the Monetary Board of the Central Bank tol decade whether we should go ahead with it or not.”
He also said this was based on the forecasted profits of First Capital PLC. “It was based on professional advice. There are also a lot of exit routes. We are also looking at other options if this does not go through,’ he said.
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