Colombo, Sri Lanka, July 2, 2020 —IFC, a member of the World Bank Group, and funds managed by IFC Asset Management Company (AMC) have signed an agreement to invest up to $50 million through a private placement of new equity shares in Commercial Bank of Ceylon (ComBank), Sri Lanka’s largest private bank. The investment will help the Bank continue to grow in Sri Lanka and overseas and build up resiliency in the wake of COVID-19.
The move, which is subject to certain conditions including regulatory approvals, comes after IFC earlier this month extended a $50 million loan to ComBank, as part of IFC’s US$8 billion global COVID-19 fast track financing facility , which aims to help companies stay in business and preserve jobs.
This equity investment includes up to $15 million from IFC and up to $35 million mobilized from IFC Financial Institutions Growth Fund and IFC Emerging Asia Fund managed by AMC. The investment, which comes as IFC marks 50 years of work in Sri Lanka, will help ComBank sustain its operations and support the economic recovery process.
“Commercial Bank is proud and honored to partner in this initiative with IFC, especially during this global pandemic situation. This placement will benefit the existing shareholders due to its attractive price that has great potential to stabilize the share price of the Bank and also will bring dynamism to the capital market. This additional cash flow will also help to mitigate some of the adverse effects brought about by the pandemic outbreak and will assist the economic revival in line with the efforts of the government. I take this opportunity to thank the IFC team and ComBank team for working tirelessly to bring this placement to fruition,” said S. Renganathan, Managing Director/Chief Executive Officer, Commercial Bank of Ceylon PLC.
Over the 50 years of IFC’s operations in Sri Lanka, ComBank has been a longstanding partner of IFC, dating back to 2003. IFC has supported ComBank through multiple investments as well as through advisory support and currently holds a 4.4 percent equity stake.
“In light of the challenges and disruptions that Sri Lanka is facing with the impacts of the COVID-19 pandemic, it is even more important that the country’s financial sector remains sound and well capitalized,” said Amena Arif, IFC Country Manager for Sri Lanka and the Maldives. “It is why IFC has already supported ComBank with financing to help ensure small and medium sized enterprises gain the funds they need to survive and thrive in the future. This equity investment will provide critical countercyclical financing to ComBank, at a time when investor sentiment has been wavering. These efforts are critical to paving the way for a resilient recovery in the country.”
These investments come after a period of several economic challenges and decreasing tourist arrivals in Sri Lanka following the April 2019 terrorist attacks. The economic malaise was further compounded by the outbreak of COVID-19 earlier this year. IFC’s investments in Sri Lanka will help secure and protect thousands of jobs in the country.
About IFC
IFC – a sister organization of the World Bank and member of the World Bank Group – is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In fiscal year 2019, we delivered more than $19 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org
About CBC
ComBank is the first Sri Lankan bank to be listed among the top 1000 banks of the world and the only Sri Lankan bank to be listed for ten years consecutively. Commercial Bank is celebrating its 100th anniversary this year. Commercial Bank was the first private Bank in Sri Lanka to achieve Rs. 1 trillion in assets and deposits. The Bank has a Tier 1 Capital Adequacy Ratio of 12.2%. The Bank, which won more than 50 international and local awards in 2019, operates a network of 268 branches and 865 ATMs in Sri Lanka. Commercial Bank’s overseas operations encompass Bangladesh, where the Bank operates 19 outlets; Myanmar, where it has a Representative Office in Yangon and a Microfinance company in Nay PyiTaw; and the Maldives, where the Bank has a fully-fledged Tier I Bank with a majority stake.
About IFC Asset Management Company
IFC Asset Management Company (AMC), a division of IFC, mobilizes and manages capital to invest in businesses in developing and frontier markets. Created in 2009, AMC provides leading institutional investors with unique access to IFC’s emerging markets investment pipeline and investment expertise, while providing positive development impact in the countries in which it invests. Investors in AMC managed funds include sovereign wealth funds, pension funds, and development-finance institutions. It has raised over$10 billion across 13 investment funds covering equity, debt, and fund-of-funds products. For more information, visit www.ifcamc.org
About the IFC Financial Institutions Growth Fund (FIG)
The $505 million IFC Financial Institutions Growth Fund is a follow-on fund to the IFC Capitalization Fund and makes equity and equity-like investments in financial institutions in emerging markets.
About the IFC Emerging Asia Fund (EAF)
The $693 million IFC Emerging Asia Fund, launched in 2016, makes equity and equity-like investments across all sectors in emerging markets in Asia.
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