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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » NDB enjoys $ 59 m net receipts; poised for investment and growth

NDB enjoys $ 59 m net receipts; poised for investment and growth

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Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Confirming that sound investment strategies could pay off handsomely NDB Group yesterday announced it will receive $ 59 million (around Rs. 7.7 billion at current exchange rate) from its deal with AIA.

“The net receipts of US$ 59 m, arising out of these transactions, give an opportunity for the NDB Group to further strengthen the strategic alliances within the financial services sector whilst enhancing and releasing core capital; a prerequisite to boost organic and inorganic growth of the NDB Group,” the bank said in a statement. “This is very timely to take on the opportunities to become a significant national and regional player in the financial sector and contribute further to the growth of Sri Lanka,” it added.

NDB also said it will continue to invest in the aggressive growth of its core banking activities of project and infrastructure financing, corporate banking, retail banking, and SME financing; while strengthening the strategic investments in its Investment Banking Cluster for the growth of its Investment Banking operations in Sri Lanka & Bangladesh, wealth management and stock brokering businesses under the recently-formed NDB Capital Holdings Plc

NDB said in keeping with its strategic rearrangement of investments within the Group pursuant to Aviva’s decision to exit Aviva NDB Insurance (ANI), NDB Group has entered into a Share Sale and Purchase Agreement with American International Assurance Company Limited (AIA) of Hong Kong, one of the largest insurance companies in the world with an exclusive focus on the Asia-Pacific region, whereby NDB Group has agreed to sell its shareholding in the Aviva NDB Holdings Lanka Ltd., (Aviva NDB Holdings) to AIA.

The finality of the intended sale process is expected to be reached by end 2012, subject to having in place the necessary regulatory and legal arrangements. With the objective of continuing to provide all financial services under one roof, NDB will also enter into an exclusive bancassurance agreement with AIA as the new controlling shareholder of ANI for a period of 20 years and continue to provide its customers a wider and stronger range of insurance products.

Pursuant to this transaction NDB Group as part of its plans to realign resources from the sales proceeds for growth, will purchase the balance shareholding of NDB Aviva Wealth Management PLC subject to having in place the necessary regulatory and legal arrangements, thereby consolidating its position as the market leader in Wealth Management in Sri Lanka. This will result in NDB Capital Holdings Plc owning 100% of this company. A fund management agreement will also be in place to manage the ANI’s insurance funds exclusively for a period of 20 years.

Commenting on this transaction, NDB Group CEO Russell De Mel said: “We are indeed pleased to have been part of the growth of Aviva NDB Insurance Plc and the entry of the insurance giant AIA will further strengthen this. Insurance, the third pillar of the NDB Group, will continue to exist through an even stronger alliance in bancassurance with AIA.

Recently, NDB Group marked a new era in the financial services industry in Sri Lanka with the re-launch of Capital Development and Investment Company PLC (CDIC) under a new corporate identity named NDB
Capital Holdings PLC. NDB Capital Holdings PLC continues to offer a unique portfolio of services comprising of investment banking, wealth management, stock brokering and private equity which will enable NDB Group to cater to the growing needs of the corporate sector and the capital market in a developing Sri Lanka.

NDB is one of the fastest growing financial conglomerates in Sri Lanka, with regional operations spanning to Bangladesh and Maldives. Its unique financial positioning of the universal banking proposition is firmly backed by the bank’s strong financial profile in terms of its capital base, profitability and asset quality. Maintaining the highest standards of competence and probity, NDB Group is firmly positioned to take on the economic growth taking place in Sri Lanka.
http://www.ft.lk/2012/09/28/ndb-enjoys-59-m-net-receipts-poised-for-investment-and-growth/

worthiness


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Such a huge one off gain of NDB is not much attracted yet.
Is it the reason for late implementation of this deal?
Foreign eyes are always placed on valued banking sector to grab the opportunities.

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@worthiness wrote:Such a huge one off gain of NDB is not much attracted yet.
Is it the reason for late implementation of this deal?
Foreign eyes are always placed on valued banking sector to grab the opportunities.
It will take sone time to appreciate NDB as its public float is high, and people bought this around Rs 100 few months few months back will come up to sell, retarding a rapid price hike.
It' s good to watch what NDB is going to do with the enexpected mammoth cash.
Last year after DFCC disposal of COMB stake, they bought 10% in NTB, after giving a huge dividend. Same can happen here. JKH & CFIN has to reduce their exposure according to CB regulations ?, will NDB eye for a stake in NTB ?

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
@WildBear wrote:


Last year after DFCC disposal of COMB stake, they bought 10% in NTB, after giving a huge dividend. Same can happen here. JKH & CFIN has to reduce their exposure according to CB regulations ?, will NDB eye for a stake in NTB ?

Aha, something to think about .

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@slstock, it's just an assumption, some times those assumptions can bring fortunes rather than fundamental or technical analysis, I think Chinwi is master in that aspect. We saw during the deal CTCE ,CDIC rose to some unrealistic levels, those who assumed early got hefty gains. Now we know Stake of NTB on sale , they got some extension from CB, and NDB has cash. So I guess it's some reasonable assumption,
NTB deal will happen within months and not years, unless they get furthet extension. So it's good to watch NTB,CFIN(, but for JKH this will be a penny). Some short term positions might bring handsome gains.

P.S. This is not a buy or sell recommendation

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
Ofcouse it will be an assumption.

These are possibilities we cannot rule out.

There have been rather decent collections of NTB in the recent weeks. Presume NTB decent performance and this anticipation is driving interest for it. But for CFIN if they only divest 5% NTB ( they hold 20%) the capital gain won;t be massive. If they divest whole stake then it is another story ( but highly unlikely and won;t be a smart move at this time of NTB ) . If the NTB deal happens between Rs 70-80, gain might be about Rs 5-6 per CFIN share.




@WildBear wrote:@slstock, it's just an assumption, some times those assumptions can bring fortunes rather than fundamental or technical analysis, I think Chinwi is master in that aspect. We saw during the deal CTCE ,CDIC rose to some unrealistic levels, those who assumed early got hefty gains. Now we know Stake of NTB on sale , they got some extension from CB, and NDB has cash. So I guess it's some reasonable assumption,
NTB deal will happen within months and not years, unless they get furthet extension. So it's good to watch NTB,CFIN(, but for JKH this will be a penny). Some short term positions might bring handsome gains.

P.S. This is not a buy or sell recommendation

worthiness


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Good contribution from WildBear & slstock.

NDB may incorporate this extraordinary income into year end books. Also, this huge gain would push up the amount of dividend to be declared as interim.
Those who bought this share at 100 level had made a reasonable gain within a short period.

I assume price fluctuation caused in last week is mainly due to different media reports published on ongoing deal....

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