DFCC’s Rights Issue concludes | Sunday Observer

DFCC’s Rights Issue concludes

DFCC Bank concluded its Rights Issue with subscriptions reaching over 43% of the Rs. 7.6 billion on offer.

This Rights Issue was the culmination of DFCC’s capital raising program for this year and came on the heels of a Rs. 10 billion debenture issue, which was oversubscribed.

The capital raised will enable DFCC to comfortably meet regulatory and funding requirements going forward and provide the Bank a stronger base on which to achieve its medium term goals.

DFCC’s CEO Lakshman Silva said, ‘‘I am grateful to shareholders who subscribed for their rights and non-shareholders who also subscribed to the issue. The depressed equity market and other considerations may have had a bearing on the investment decisions of some shareholders.

“The tragic events of Easter Sunday occurring a day before our last date for acceptance of payments also unfortunately had an impact on the level of subscription. I am however, pleased that a majority of the shareholders viewed the Rights Issue as an ideal opportunity to maintain / increase their holding in DFCC at a cost well below its intrinsic value,” he said.

“This augmentation of the Bank’s equity capital base will provide the impetus for stronger growth, whereby shareholders will benefit not only by the enhanced value created, but also by a recovery in the equity market.

“I must also add that in the context of this Rights Issue, DFCC’s last call on shareholders was way back in 2007. Given the growth that has taken place, this indicates that the Bank has a well-planned strategy for balancing its capital sourcing through a judicious level of gearing.

“Although there was a shortfall in the level of subscriptions for this issue, the resultant equity boost ensures that DFCC’s capital base will continue to be above regulatory requirements for the medium term growth envisaged by the Bank.

Moreover, it would enable DFCC to consider other non-organic growth options that will enhance shareholder value,” the CEO said.