Estimates Rs. 150 billion market potential
The NDB group intends providing Islamic financing through Mudharbha (deposits), Murabaha (trade finance), Musharaba (term loans), and Ijarah (leasing) through a Sharia compliant Islamic Banking window, National Development Bank PLC has said in its prospectus issued for the forthcoming debenture issue.
NDB said that it intended to formalize the Islamic financing operations by early 2014.
NDB has estimated that the market potential for Islamic Banking in the country is over Rs.150 billion with less than 10% of this market captured by the competitors of the NDB group.
The group currently has 78 branches in a rapidly expanding branch network which is planned to be grown by the end of 2018 to improve ‘windows’ and service centres improving accessibility.
NDB is making an initial issue of 50 million rated unsecured subordinated redeemable debentures carrying a face value of Rs.100 each to raise Rs.5 billion.
It has retained an option to issue a further 30 million such debentures to raise Rs.3 billion more as well as a third option of increasing the issue up to 20 million debentures to raise up to another Rs. 2 billion at the discretion of the bank in the event of an oversubscription.
These debentures to be listed on the Main Board of the CSE has been rated A+(lka) by Fitch Ratings Lanka Limited.
The issue offers four types of debentures carrying 13% interest payable semi-annually for a 5-year tenure; 13.40% payable annually for a 5-year tenure; 13.90% annually for a 10-year tenure and 14% payable annually for a 12-year tenure.
The Bank of Ceylon is the top shareholder of NDB as at October 31, with 9.94% followed by the EPF (9.60%), Sri Lanka Insurance Corporation (General Fund – 5.70%) and Life Fund (4.74%). The ETF owns 3.22% of NDB.
Among the big private shareholders are Dr. Sena Yaddehige (5.26%), Mr. A.K. Pathirage (1.80%), HNB (2.60%) and Asian Alliance Insurance with three accounts holding nearly 5% and United Motors (1.21%).
Several foreign funds are also among the top 20 shareholders of NDB.