Accordingly the first initiative of CDIC spreading its new wave synergies was taken yesterday with the appointment of head of National Development Bank’s investment banking cluster Vajira Kulathilake as the Chief Executive Officer (CEO) of NDB group’s strategic investment arm Capital Development and Investment Company PLC (CDIC).
The move comes after the latest disclosure to Colombo Bourse in which NDB Bank PLC (NDB) said it had decided to divest the shares it holds in two of its fully owned subsidiaries to Capital Development & Investment Company PLC, which is also one of NDB Bank subsidiaries. Accordingly, NDB will divest 100% of the shares it holds in NDB Investment Bank Limited and NDBS Stock Brokers (Private) Limited to CDIC. The notice further added that the deal will go through based on the Net Book Value of each company reflected in the accounts of the respective companies as at 31st December 2011.
According to the financials of NDB Bank PLC it outlines in 2010 Annual Report that the Net Asset Value (NAV/Net Book Value) of NDB Investment Bank was Rs.148 million and NDB Stockbrokers was Rs.238 million. The cost of NDB for NDB Investment Bank and NDB Stock Brokers is valued at Rs.53.922 million and Rs.26.94 million respectively.
NDB Group holds 99.6% stake in the Capital Development & Investment Company PLC (CDIC) which has a Net Asset Value of Rs.2.3 billion as at 2010 annual report and as at yesterday 22 February 2012 the market capitalization of CDIC was Rs.13.44 billion which CDIC group yielded earnings per share (annualized) of Rs. 6.78 for period of twelve months as at 30 September 2011. Subsequently company’s NAV per Share was at Rs.117.30 and the Return On Equity (ROI) was 5.8%.
CDIC’s largest strategic investment is in Aviva NDB Finance Lanka Ltd, through which the Company holds a 36.27% stake in Aviva NDB Insurance PLC.
CDIC has 41.56% of Aviva NDB Finance Lanka (Private) Limited in which CDIC’s initial investment is valued at Rs.741.33 million and Directors Valuation as at 2010 annual report stands at Rs.1.14 billion.
As to date, Aviva NDB Insurance PLC (CTCE) market capitalization is valued at Rs.6.07 billion and CDIC would have capital inflow of approximately Rs.2.2 billion (current market value) via Aviva NDB Finance Lanka (Pvt) Ltd if CTCE stake was sold to a new investor according to market sources.
In April 2011 quoting foreign media reports news carried an article which said UK insurer Aviva would only remain in countries where Aviva’s operations provide at least $100 million in profit and gives a minimum 12% return on capital, or are valued at a minimum of $1 billion.
Aviva is present in 30 countries and it entered Sri Lanka in 2006 partnering with National Development Bank to establish Aviva-NDB Insurance, which was earlier known as Eagle Insurance.
The financial accounts of CDIC further notes that the dividend income received from Aviva NDB (via Aviva NDB Finance Lanka (Pvt) Ltd.) to CDIC amounted to Rs.92 Million for 2010. . CDIC’s assets are valued at Rs.5.3 billion.
In a stock exchange filing NDB Bank PLC disclosed in December 2011 that Aviva International Holdings of United Kingdom (AIH UK) with effective from 1 December 2011 transferred its entire shareholding in Aviva NDB Finance Lanka Ltd (ANFL) amounts to 58.44% stake to Aviva Asia Holdings (Pvt) Ltd (Aviva Asia), a wholly owned subsidiary of AIH UK which according to a part of ongoing internal reorganization of the legal structures of Aviva Group's business in Asia Pacific Region. ANFL has 87.27% stake of Aviva NDB Insurance PLC and the disclosure said that the latest move by AIH UK will have no effects on CDIC’s and AIH UK’s Joint Venture agreement on 1 February 2006 in which CDIC became 41.56% shareholder of ANFL and AIH UK became the 58.56% stake holder of ANFL.
CDIC also holds a 51% stake in the Ordinary Share Capital of NDB Aviva Wealth Management Ltd. (NAWM) (formerly known as Eagle NDB Fund Management Company Ltd. NAWM is the largest fund Management Company in Sri Lanka, managing Assets in excess of Rs. 42 billion as at end 2010 which is also a unit trust and fund management company licensed by the Securities and Exchange Commission of Sri Lanka.
Subsequently, during 2010, CDIC has earned revenue of Rs..476.4 million through its investments and further revenue of Rs.188.3 million from NDB Aviva Wealth Management Ltd.
During the year, 2010 alone CDIC had invested a total sum of Rs 750 million in portfolio of quoted equity investments, to be part of the promising growth in the stock market. This investment portfolio was managed by NDB Aviva Wealth Management Ltd. Additionally, the Company also invested in the Eagle Gilt Edged Fund, selected securitizations, debentures and Initial Public Offerings and a trading equity portfolio with NDB Stock Brokers (Private) Limited.