|
|
 |
 |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. |
Summary of Project Information (SPI) |
| |
| Project number | 10241 |
| Project name | Maldives Leasing Company |
| Country | Maldives |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Maldives Finance Leasing Company Limited |
| Environmental category | FI |
| Date SPI disclosed | December 20, 2000 |
| Projected board date | January 30, 2001 |
| Status | Active |
| Previous Events | Invested: September 26, 2002
Signed: May 6, 2002
Approved: April 19, 2001 |
|
| Project sponsor and major shareholders of project company |
Technical Partner: National Development Bank of Sri Lanka (NDB)
Major Shareholders: National Development Bank (NDB)
Maldives Transport and Construction Corporation (MTCC)
Bank of Maldives (BOM)
International Finance Corporation
Private Investors
The project sponsor, which is also the largest shareholder (35%) and technical advisor, is the National Development Bank (NDB). NDB was established in 1979 as the second development finance institution (DFI) in Sri Lanka. Originally a state-owned enterprise, NDB went through a major privatisation in 1993 with 61% of the shares sold to private investors. In 1997, a second round of privatisation brought down the direct government ownership to 7.33% (18% in aggregate for all government-controlled institutions). NDB is a publicly listed institution with a very diverse shareholding: nearly 65% of the shares are held by foreign institutions. It is listed on the Colombo stock exchange with a market capitalisation of US$55 million equivalent. As of June 30, 2000, NDB had an asset base of SLR 38,719 million (US$509 million equivalent) and equity of SLR 5,983 million (US$ 78.6 million equivalent).
NDB is well known to IFC. In 1999, IFC Board (R-99193) approved a financing package of US$38.5 million to NDB consisting of: (i) a credit line of US$35 million for NDB; and (ii) a convertible loan of US$3.5 million. IFC and NDB long standing relationship dates back to 1985 when the two institutions guaranteed a debenture issue for Lanka Orix Leasing Company. In addition, IFC also approved an equity investment of US$1.4 million for a 15% shareholding in a new private sector housing finance company, named NDB Housing Finance Limited, a joint venture with NDB and HDFC, India. In 1992, the two institutions collaborated in setting up an asset management company, CKN Fund management. In 1998, IFC and NDB co-guaranteed a debenture issue for a leasing company, Mercantile Leasing Limited (MLL), and in discussion with IFC, NDB has since become its largest shareholder.
Maldives Transport and Contracting Company (Plc) Ltd. (MTCC) is the main importer of Yanmar Diesel engines and spare parts, used mainly by the fishery industry. MTCC, which has an asset base of US$6 million equivalent as of December 31st, 1999, is also heavily engaged in selling and renting construction machinery, provision of marine transport services, sale of diesel engines, spare parts, and harbour dredging. It is 60% owned directly and indirectly by the government and 40% by the general public.
Bank of Maldives (Plc) Ltd. (BML) is the only indigenous bank in the Maldives controlling over 40% of the financial sector assets. Started
in 1982, BML was originally formed as a joint venture with the IFIC Bank of Bangladesh and the Government of the Maldives. After 10 years of
very successful operations the shareholding proportions have changed. Currently, 75% of the shares are owned by the government directly
and indirectly and 25% by the general public. In the year ended December 31st, 1999, the assets base and net worth of BML were Maldivian
Rufiya (MRf) 1.3 billion (US$ 120.4 million equivalent) and MRf. 141 million (US$ 12.7 million equivalent) respectively. |
|
| Total project cost and proposed IFC investment |
Project Cost Including proposed IFC investment:
Total project cost: US$ 15 million
IFC Investment: Equity - up to US$ 1.25 million
Loan - up to US$ 3.0 million |
|
| Location of project and description of site |
| The company will be headquartered in Male, the capital of the Republic of Maldives. The project will be carried out in the Maldivian region. |
|
| Description of company and purpose of project |
The project involves the establishment of the first private sector leasing company in the Republic of Maldives, Maldives Leasing Company Limited (MLC or the Company). The project will address the country's large demand for long-term equipment financing in the tourism, construction, transportation, and fishery sectors. This demand is also sparked by entrepreneurs who seek capital to generate self-employment opportunities as fishermen, transport operators for tourism industry, and construction equipment suppliers. MLC is expected to play a pivotal role in the Maldivian economy, diversifying the financial system and offering term finance.
IFC's role in this project is traditional in nature. By investing in MLC, IFC will pioneer the establishment and the development of the first professionally managed private leasing company in the Maldives. IFC has introduced a strong technical partner, NDB, one of the leading financial institutions in the region, to provide the essential know-how. MLC will in turn provide the much-needed long-term finance to the country key economic sectors. IFC plays also a catalytic role in this project: its presence is expected to help mobilize long term financing from some of the banks, provident funds, and insurance firms. IFC has also initiated discussions with the regulatory authorities to establish the legal and the regulatory framework to enable the provision of lease/asset financing in the Maldives. In summary, IFC's participation in this first private sector company, alongside sound sponsors and strong technical partners, will set a high standard for the industry and at the same time encourage others to enter.
In addition to create a new institution, this project will introduce, in the Republic of the Maldives, new technology, know-how and skills transfer. NDB is expected to bring into the Maldives international experience in marketing, structuring, accounting, and management. Also, the project is expected to contribute to industrial development, and contribute to employment generation in this small island economy. |
|
| Environmental and social issues - Category FI |
This is a Financial Intermediary (FI) type 1 project according to IFC's environmental review procedure. For relevant operations, the Company will be required to implement an environmental management system consistent with host country requirements. IFC will assess the Company's capability to carry out environmental reviews. In addition, the Company will be required to submit an annual environmental performance report.
|
|
|
| To contact the project company, please write to: |
| maijazuddin@ifc.org |
|
|
|