With SDB bank set to host their Secondary Public Offering (SPO) in early August, investor forums both locally and globally continue to discuss the differentiated investment potential the bank’s strategic SME growth focus carries. A cornerstone of their historic growth journey, it will afford customers, shareholders, other stakeholders and the general public a unique opportunity to share in growth across the nationally-critical SME segment.
SDB bank’s upcoming SPO on 5th August, 2021 represents the second phase of its capital raising plan which commenced last year. The first phase involved their phenomenally successful rights issue in FY 2020, which gained recognition as the first-ever digital rights issue by a Colombo Stock Exchange-listed entity plus the first local digital share subscription to be oversubscribed. Distinct from an IPO, SPO is a capital raising effort by a firm that is already listed on their respective stock exchange, and it involves the sale of new shares to the public through a secondary offering.
The bank will offer 68 million new ordinary voting shares to the public as part of the SPO at a share price of LKR 51.50, with provision for an additional 20 million shares in the event of an oversubscription. Considered industry-wide to be the rural growth engine of Sri Lanka, SDB bank’s latest capital raising effort will entail manifold benefits for the bank, its shareholders and diverse customer base, while positively impacting the national economy.
Firstly, it will allow SDB bank to continue its strategic growth plan for the next 3-4 years uninterrupted, further extending the growth phase it has enjoyed on the back of its focus on SMEs, female entrepreneurship, emphasis on digitalization and taking of digital banking services to the masses including the island’s rural most parts.
Equally, the raising of capital affords the bank added financial strength in continuing its historic and strategic support of SMEs, who form the backbone of the Sri Lankan economy and account for 52% of national GDP. The SPO-raised funds will support the bank’s expected loan portfolio growth across this segment and others for the period 2021-2022, ensuring entrepreneurship is nurtured, allowing for greater participation and contribution to the economy.
Also, the capital raising exercise will ensure SDB bank can maintain a stronger capital base, by strengthening its equity base and thereby its capital adequacy ratios in line with the BASEL III guidelines of the Central Bank. This will allow SDB bank greater resiliency in comfortably absorbing external economic shocks arising from unexpected events.
NDB Investment Bank Limited will perform the role of Financial Advisor and Manager to the SPO that is to be conducted on the CSE. The two parties share a long history of cooperation involving investments, with NDBIB previously advising SDB bank on their initial listing on the Colombo Stock Exchange in 2012, the successful Rights Issue in 2020, as well as numerous other fund-raising transactions for close to a decade.
SDB bank CEO Thilak Piyadigama stated, ‘We’re extremely proud and energized by the extent of the progress we’ve made over the years together, with our focus on sustainable growth in key national segments, and I confidently invite existing and new shareholders to join hands with SDB bank as we continue to fuel growth countrywide’.
