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ICRA Lanka assigns [SL]A-(Stable) outlook to First Capital Treasuries Limited

ICRA Lanka Limited, a wholly owned subsidiary of ICRA Ltd, a group company of Moody’s Investors Service has assigned the Issuer rating of [SL]A- (pronounced SL A minus) with a stable outlook to First Capital Treasuries Limited (FCTL or the company). ICRA Lanka has also assigned the [SL]BBB+ (pronounced SL triple B plus) rating with stable outlook to the LKR 500 Mn Subordinated Unsecured redeemable Debenture programme of the company.

ICRA-lanka-rating
The ratings factor in FCTL’s position as an established Standalone Primary Dealer in Sri Lanka with a long track record, established franchise and clientele. The rating also factors in the prudent internal control and processes, along with the adequate risk management systems put in place, which is commensurate in relation to the risks intrinsic to a Primary Dealer’s business. The ratings also factor in FCTL’s comfortable liquidity position due to liquid nature of the portfolio and availability of sanctioned bank facilities. ICRA Lanka notes that while the portfolio of the company has minimal credit risk, the same however is susceptible to adverse movements in the interest rates. The rating takes note of the improvement in the financial performance of the company during FY2015, due to favourable interest rate scenario, which resulted in trading gains for the company; however the same is likely to moderate in the current financial year as the market interest rates are likely to remain largely range-bound or move upwards. In the above context, ICRA Lanka also notes that FCTL’s portfolio duration, which had remained largely conservative in the past increased to 3.7 in March 2015 (3.2 in June 2015); this is likely to make its profits susceptible to unfavourable interest rate movements, if the same occurs within a short time span. Nevertheless, FCTL’s established risk management system, its experienced dealing team and, its investment committee, which largely consists of the senior management and Board of Directors, reviews the various risks regularly thus mitigating risks to an extent. ICRA Lanka notes that the company’s regulatory capital adequacy is comfortable at 21.8% as in March 2015 vis a vis the regulatory requirement of 8%; however FCTL’s gearing has generally been higher than the industry average and, stood at about 10.2 times in March 2015 (5.9 times in June 2015) The company’s regulatory capitalization is comfortable to absorb the losses, if any, on the current portfolio due to unfavorable interest rate movements. ICRA Lanka further notes that there is scope for FCTL in improving its effective participation in the primary market; trading gains in FY2015 was largely from the secondary market transactions. Further, the ratings take cognisance and would closely monitor the developments on the outstanding contingent liabilities (Tax demands), which stood at about 20% of the net-worth as in March 2015.

FCTL’s portfolio as in March 2015 stood at about LKR 16 Billion, the same reduced to about LKR 10 Billion in June 2015 as the company brought down its portfolio holdings as the interest rate scenario is likely to remain largely range-bound or move upwards going forward, in the current financial year. The portfolio consists of Treasury bills and bonds, which do not carry credit risk and are highly liquid assets. The company is expected to deal only with government securities going forward also. However, FCTL is exposed to the counter party risks on its reverse repo exposures which were largely concentrated to about 7-8 entities as in March 2015.The company however closely monitors its exposures and takes proactive measures to mitigate the impact of the above mentioned risks. ICRA Lanka however notes that the company has an established clientele and had undertaken transactions with more than 50 entities during the year apart from the retail participants.

The company also has access to over 2500 clients of the First Capital Group (First Capital Holdings PLC and its subsidiaries).The First Capital Group entities have interests in margin trading, stock broking, asset management, corporate debt structuring and other
investments banking activities. The size of these group entities presently however is quite modest in relation to FCTL.

During FY2015, the company’s overall profitability improved as trading income increased sharply from LKR 227 Mn in FY2014 to LKR 900 Mn, while interest income remained largely stable. The above support the improvement in the overall profits of the company during the year as the operating expenses increased on account of bonus payments to employees. Consequently, FCTL’s PAT as a proportion of average assets improved to 5.1% in FY2015 from about 4.2% in FY2014. ICRA Lanka notes the company’s profitability performance in the current financial year is expected to moderate as trading gains are likely to be lower than in FY2015. FCTL’s portfolio consists of highly liquid assets, which along with the sanctioned bank lines of about LKR 1 billion with the First Capital Group provides comfort from a liquidity perspective.
Company Profile
Incorporated in the year 1982, FCTL is a Licensed Primary Dealer in Sri Lanka. The company is 94.4% held by First Capital Limited, while First Capital Limited is in-turn 99.9% held by First Capital Holdings PLC. First Capital Holdings PLC is 74.9% help by Dunamis Capital PLC, which is the ultimate parent of FCTL.

During FY2015, FCTL reported a net profit of LKR 730 Mn on a total asset base of LKR 16,096 Mn vis a vis a net profit of LKR 518 Mn on a total asset base of LKR 12,552 Mn.

In the three months ended June 2015, the company reported a net profit of LKR 107 Mn on a total asset base of LKR 10,630 Mn.
September 2015

ICRA Lanka assigns [SL]A- rating with stable outlook to First Capital Holdings PLC

ICRA Lanka Limited, a wholly owned subsidiary of ICRA Ltd, a group company of Moody’s Investors Service has assigned the Issuer rating of [SL]A- (pronounced SL A minus) with a stable outlook to First Capital Holdings PLC (FCH or the company). ICRA Lanka has assigned the [SL]A- (pronounced SL A minus) rating to the LKR 500 Mn Senior Unsecured Redeemable Debenture programme of the company. ICRA Lanka has assigned the [SL]A2+ (pronounced SL A two plus) rating to the LKR 1,000 Mn Commercial Paper programme of FCH.

ICRA-lanka-rating

ICRA Lanka has taken a consolidated view of FCH and its subsidiaries due to their common brand and senior management team and, other operational and financial linkages between the group entities. The ratings factor in the FCH’s status as the holding company of First Capital Treasuries Limited (FCTL, a standalone Primary Dealer in Sri Lanka with Issuer Rating of [SL]A- with stable outlook). The ratings take note of the improvement in the business and financial performances of the other group entities, which are engaged in corporate debt structuring, corporate finance, asset management, stock broking and in extending margin trading facilities, over the recent past. ICRA Lanka however notes that FCH’s performance is largely dependent on performance of FCTL, as the contribution from the other entities presently is quite modest. FCTL accounted for about 80% of the total consolidated asset base of FCH and about 70% of its consolidated profit before tax for FY2015. Thus, FCH’s performance is expected to be susceptible to the risks inherent in the primary dealer business. The above mentioned risk however is likely to be moderated by the prudent internal control and processes, along with the adequate risk management systems put in place for FCTL. The FCH group has an established clientele of over 2500, which is expected to support the business growth of the other group entities. ICRA Lanka takes cognisance of the comfortable liquidity position of the FCH group given the highly liquid assets and the sanctioned credit facilities from banks with the group entities.
FCH, being a holding company derives its income from the dividends from the group entities and income from its investments, which includes interest income and profit from investments. During FY2015, income from investments accounted for about 60% of the total income of FCH (Standalone), while dividend income contributed to the rest vis a vis 84% of income from dividends in the previous financial year. The increase in the investment income in FY2015 could be attributed to the one-time gain of about Rs.233 Mn following the reclassification of its investment in Orient Finance PLC, which was subsequently sold in June 2015.The company’s standalone performance is largely linked to the dividend income from its principal subsidiary, FCTL and, investment income. The expected moderation in the performance of FCTL in FY2016 vis a vis FY2015, is likely to impact the overall performance of FCH. The company’s funding profile is characterised largely by short term funding, which accounted for close to 80% of the total standalone debt in March 2015, while the remaining was in the form of long term debentures. FCH’s asset profile (Standalone) largely consists of short term loans funding to its group entities. The company’s standalone gearing stood moderately high at about 3.4 times as in March 2015; however the FCH group access to the sanctioned bank lines and its liquid assets provides comfort from a liquidity perspective.
ICRA takes note of the improvement in the performance of the other subsidiaries in the group. First Capital Limited, which is 99.9% held by FCH, is involved in corporate debt structuring, corporate finance and advisory
services. FCL witnessed an improvement in the performance due to increase in the fee based income (increased to Rs 127 Mn in FY2015 as compared to 12 Mn in FY2014) arising from above mentioned services offered, however profitability continues to be driven by the dividend income from the principle subsidiary, FCTL, which accounted for close to 50% of the total income of about Rs.1.1 Bn, while the remaining was contributed by interest income on its investments. FCL is the step-down holding company for the other entities in the FCH group including FCTL; First Capital Asset Management Limited (FCAML) that is involved in portfolio management; First Capital Markets Limited (FCML) that is involved in providing margin trading facilities and First Capital Equities (Pvt) Limited (FCEL) which is engaged in stock broking activities. FCAML, FCML and FCEL together accounted for about 6% of the FCH consolidated income and about 2% of the consolidated profit before tax. ICRA Lanka takes note the improvement in the business volumes in the above mentioned entities during FY2015, which supported the financial performances. FCML and FECL reported profits for FY2015 vis a vis losses in the previous financial year, while the FCAML was profitable and its financial performance has remained largely range bound over the last few years.

Company Profile
Incorporated in the year 1992, FCH is a public limited company listed on the Colombo Stock Exchange. FCH is the holding company of the financial services arm of Dunamis Capital PLC, which holds 74.9% in FCH. The company is engaged in making investments and managing its subsidiaries i.e. First Capital Treasuries Limited (FCTL) which is an authorised primary Dealer, First Capital Limited (FCL) involved in structuring and placement of corporate debt and corporate financial advisory services, First Capital Asset Management Limited (FCAML) involved in unit trust and portfolio management, First Capital Markets Limited (FCML) involved in providing margin trading facilities and First Capital Equities (Pvt) Limited (FCEL) which is engaged in stock broking activities and First Capital Investments (Private) Limited, which is the holding entity of FCEL.
During FY2015, FCH reported a consolidated net profit of LKR.985 Mn on a total asset base of LKR 20,464 Mn as compared to a net profit of LKR 331 Mn on a total asset base of LKR 16,360 Mn in the previous fiscal.
The company reported a standalone net profit of LKR 436 Mn on a total asset base of LKR 3,437Mn as compared to LKR 471 Mn on a total asset base of LKR 2,376 Mn.
September 2015

First Capital Holdings PLC Maintains Momentum

Financial Review for the quarter ended 30th June 2015

Key Business Highlights

      • The company reported consolidated profit after tax of 176Mn for the quarter ended 30th June 2015
      • Generated a fee income of Rs. 27Mn in mobilising Corporate Debt Securities during the period
      • Realized trading gains in Government Securities amounting to Rs. 77Mn for the quarter
      • LKR 7.1Bn assets under management as at 30 June 2015
      • Sale of 25% stake in Orient Finance PLC resulting in a capital gain of Rs. 27.5Mn for the quarter

25th August 2015, Colombo, Sri Lanka: First Capital Holdings PLC recorded a consolidated profit after tax of Rs. 176Mn for the quarter ended 30th June 2015.
Consequent to the policy rate reductions in April 2015 the company’s structuring and placement arm First Capital Limited, which specialises in mobilised listed debentures, asset backed securitisations and commercial papers, successfully generated a fee income of Rs. 27Mn during the period under review (2014/15 – Rs. 13Mn). While the group’s primary dealer First Capital Treasuries Limited realised a trading gain of Rs. 77Mn for the quarter, capitalising on prevailing market conditions.

“While we are pleased with our performance to date, we seek to transform the prevailing macro-economic factors to our favour. The Group will continue to build on the current growth momentum across all its subsidiary businesses while expanding on corporate advisory and broader investment banking services,” said Dilshan Wirasekara, highlighting the Group’s vision of becoming Sri Lanka’s leading investment bank and its performance thus far.
Meanwhile during the first half of the financial year 2015/16, the group’s Wealth Management and Unit Trust, First Capital Asset Management Limited, reflected a growth of Rs. 2.9Bn, increasing the division’s total assets under management to Rs. 7.1Bn. With a return of 13.13% for the year ended 30 June 2015, First Capital Wealth Fund continuing its steady performance.
Consistent with the mixed performance of the Colombo Stock Market, as foreign participants exited the market due to political uncertainty the Stockbroking division First Capital Equities (Private) Limited saw lower trading volumes resulting in lower broking income.
Furthermore the company divested its 25% stake in Orient Finance PLC resulting in a capital gain of Rs. 27.5Mn for the quarter. The investment realized a total gain of Rs 260.8Mn, including gains recorded in the previous financial year amounting to Rs. 233.3Mn.

“The Group will continue to engage actively with its customers and use the leadership position and reputation it has established in the marketplace to broaden the scope of its fee-based operations. Whilst primary dealer income will continue to be the strongest component of profits in the short-term, it is our expectation that fee income will grow to be a meaningful contributor in the years ahead.” Concluded Wirasekara.

First Capital Holdings PLC comprises of First Capital Treasuries Limited, First Capital Asset Management Limited, First Capital Equities (Private) Limited, First Capital Markets Limited and First Capital Limited. The company’s Board of Directors comprises of Ms. Manjula Mathews – Executive Chairperson, Dinesh Schaffter – Managing Director, Eardley Perera, Ms. Minette Perera, Nishan Fernando and Chandana de Silva as Independent Directors.

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Chief Executive Officer of First Capital Holdings PLC Mr. Dilshan Wiresekara.

About First Capital :

First Capital Holdings PLC, an Investment Bank listed on the Colombo Stock Exchange, is the holding company of the First Capital Group offering a full range of products and services, through subsidiaries operating in Debt & Equity markets including First Capital Treasuries Limited, a Primary Dealer licensed by the Central Bank of Sri Lanka, First Capital Asset Management Limited, an Investment Manager licensed by the Securities and Exchange Commission of Sri Lanka which also manages several dedicated fixed income Unit Trusts, First Capital Equities Private Limited a licensed Stockbroker and Member of the Colombo Stock Exchange, First Capital Markets Limited a licensed Margin Provider and First Capital Limited, a structuring and placement agent for debt and equity, and provider of corporate finance and advisory services.
For nearly 30 years, the First Capital Group has been a leading non-bank financial institution in Sri Lanka. A pioneer Primary Dealer in government securities, First Capital has steadily grown to become a leader in this field, buoyed by a loyal and continuously growing customer base. The company operates in Colombo and several major cities in Sri Lanka.
First Capital Holdings PLC operates as a subsidiary of Dunamis Capital PLC.

First Capital powers National Conference of Chartered Accountants

First Capital Holdings PLC, a leading investment bank in Sri Lanka, recently came onboard to power the 36th National Conference of Chartered Accountants with a Gold sponsorship.

The conference, which will be held from November 4 to 6, 2015, is the flagship event of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and is one of the most sought-after events in the country’s corporate calendar, attended by high-profile business leaders and chartered accountants, including chairman, directors, CEOs, CFOs and partners.

This year’s conference will be held on the theme ‘Collaborate to Compete’ and is expected to attract about 1500 participants. The conference to be held at the BMICH, Colombo, will comprise of two days of technical sessions.

First Capital Holdings PLC Chief Executive Officer Dilshan Wirasekara said, “We at First Capital are delighted to sponsor a benchmark event such as the National Conference of Chartered Accountants. We believe this forum is held at the right moment as Sri Lanka’s capital market enters the next phase of growth, the theme of ‘Collaborate to Compete’ becomes significant to the industry.

In our commitment towards becoming the country’s leading investment bank we are constantly seeking to sharpen our competitive edge by collaborating with our investor base, regulatory authorities and governing bodies in offering innovative investment solutions,” Wirasekara said.

This is the first time First Capital Holdings PLC has been on-board as a Gold sponsor.

CA Sri Lanka President. Arjuna Herath said that over the years the conference has built a reputation as a business summit that focuses extensively and spurs insights into broad economic and business issues, apart from its core emphasis on finance-related topics.

“Every year we attract some of the leading companies in the country who come on-board as sponsors for this important corporate event and I take pleasure in welcoming First Capital Holdings PLC as a Gold sponsor this year,” Herath said.

First Capital Wealth Fund recognized as best performing Fixed Income Unit Trust for second year

First Capital Asset Management Limited, Managers of the First Capital Wealth Fund, announced a dividend of Rs. 140 per unit.
The First Capital Wealth Fund has been recognized as Sri Lanka’s best performing Fixed Income Unit Trust for 2014 and 2013, as per statistics issued by the Unit Trust Association.

With an annualized yield of 15.48 percent (as of 31st March 2015) the First Capital Wealth Fund, which invests in debt and government securities, declared dividend representing 95.9 percent of net profit after tax for 11 months ending 28 February 2015.

The First Capital Money Market Fund launched in September 2014 similarly displayed a remarkable performance with an annualized yield of 7.09 percent (as of 31st March 2015).

The fund declared a dividend of Rs. 18.50 per unit. The fund invests in short term fixed income instruments with a maturity for less than a year and paid a dividend representing 95.7 percent of net profit after tax for six months ended 28 February 2015.

“The successful growth of the unit trust funds under our management is attributed to a tripartite combination of prudent management, an astute assessment of market opportunities and leveraging on interest rate fluctuations,” said Dilshan Wirasekara, Chief Executive Officer of First Capital Holdings PLC.

“As a fully-fledged Investment Bank specializing in debt market services and leading non-bank primary dealer in Sri Lanka, we will continue to work closely with our stakeholders to maintain a conducive investment environment and provide competitive returns for our investors. With specialized knowledge and industry expertise garnered through our position and experience in the market, we are confident that the unit trusts managed by First Capital Asset Management Limited will continue to reap the rewards of timely, well-informed investments,” concluded Wirasekara.

First Capital Asset Management Limited is a Securities and Exchange Commission approved fund manager. The company specializes in managing investments for high net worth individuals, trusts and companies. The funds are regulated by the Securities and Exchange Commission of Sri Lanka and supported by the Trustee services of the Bank of Ceylon.

Stock Watch – First Capital Holdings PLC

What happens when a news outlet teams up with an leading investment bank with over 3 decades of experience?
First Capital Holdings PLC together with NewsRadio brings you Stock Watch, a comprehensive recap of the day’s performance on the Colombo Stock Exchange. It’s accurate, up-to-date reporting backed up by unparalleled financial know-how.
Tune in to TNL Radio at 5.50pm every weekday for all this and more. The NewsRadio Stock Watch with First Capital Holdings PLC. A review you can rely on.

First Capital’s 9-month after tax profit tops Rs. 1 b mark

First Capital Holdings PLC has recorded a profit after tax of Rs. 1.09 b for the nine months ended 31 December 2014, indicating a stable growth trajectory. The company, which offers a range of investment banking products and services across the financial spectrum, saw an increase in profit after tax, in comparison to Rs. 262.9 m reported for the same period last year. Commenting on the Group’s performance over the period under review, First Capital Holdings PLC Chief Executive Officer Dilshan Wirasekara said: “Strategic decisions and concentrated growth initiatives have enabled us to capture areas of advancement and build on our business footprint.

We are both pleased and grateful that we have grown to gain the support and trust of our investor base.” Leveraging on favourable macro-economic conditions, a decline in secondary market interest rates and research-based decision making, First Capital Treasuries, the Group’s Primary Dealer Unit, cemented its position as a frontrunner in the Non-Banking Primary Dealer segment. First Capital Treasuries realised trading gains of Rs. 905 m during the period under review – driving an increase from Rs. 145 m reported during 2013/14. Funds under management saw a four-fold increase to Rs. 4.2 b, bearing testament to the unit’s progression during the period. The period under review concluded with the First Capital Wealth Fund establishing itself as the best performing fixed income Unit Trust fund in Sri Lanka. The Stock Broking and Margin Trading units also contributed positively towards the Group’s results during the period under review.

The Corporate Debt Unit mobilised Rs. 19 b in corporate debt securities, including the structuring and placement of Rs. 9.4 b listed debenture issues, earning a corresponding fee income of Rs. 112 m (2013/14 – Rs. 26 m). First Capital surpassed competitors to become the leading listed debenture manager as well as the leading intermediary in the secondary market for listed debentures via the DEX. First Capital Treasuries poised itself to take advantage of the dynamic financial environment by issuing a listed debenture of Rs. 500 m in January 2015, improving its long term capital base (Tier II).

The group’s stockbroking arm, First Capital Equities, became a fully owned subsidiary in November 2014. Reaffirming the group’s commitment to its client base and long-term strategic priorities, Wirasekara concluded: “Our results confirm that our development initiatives and decision making have been a success. We hope to make the most of our current position by strengthening the company in order to attain our vision of becoming Sri Lanka’s leading investment bank. We are ideally placed to sharpen our competitive edge further and deliver consistent value for our clients.” For nearly 30 years, First Capital Holdings PLC has been a leading investment bank operating in Colombo, Matara and Kandy. The company offers a full range of investment banking products and services. First Capital Holdings PLC has a credit rating of A-.

First Capital Treasuries announces Rs.500 mn Debenture Issue

First Capital Treasuries Limited, a Primary Dealer licensed and appointed by the Central Bank of Sri Lanka and a subsidiary of First Capital Holdings PLC, has announced that it intends to issue Subordinated, Unsecured, Redeemable Debentures with a principal value of Rs.500 million maturing in five years and bearing an interest rate of 9.5% per annum payable annually. The issue will open on January 27, 2015.
Debentures are priced at a face value of 100 each and will be listed on the Colombo Stock Exchange. The debenture issue is rated BBB+ while the issuer, First Capital Treasuries Limited, is rated A- by Lanka Rating Agency. First Capital Limited, the Corporate Debt Structuring and placement arm of the group, will be managing the issue and Bank of Ceylon will act as Trustee to the issue.
Dilshan Wirasekara, Chief Executive Officer of First Capital Group, said the company plans to utilize the funds raised through the debenture issue to achieve long term funding base of the company by way of tier 2 capital and increase capital adequacy, which will allow the company to grow its core business and allow further leverage on government securities whilst being well above the regulatory directives by Central Bank of Sri Lanka.
First Capital Treasuries is licensed and appointed by the Central Bank of Sri Lanka to deal exclusively in Government Securities and currently stands at a commanding position as the leading non-bank Primary Dealer in the country.
The company was incorporated in August 1982 and is the primary dealer arm of First Capital Holdings PLC, an investment bank pioneer in debt and equity markets.
“We have done remarkably well during the current financial year and as the pioneer and leading non-bank Primary Dealer, we are extremely proud that we are the first Primary Dealer to offer a listed debenture to all our valued investors,”Wirasekara said.

First Capital Holdings honours stakeholders

First Capital Holdings PLC recently hosted an evening of cocktails to celebrate the ongoing success of its partnerships and fete its stakeholders. Speaking at the reception, Executive Chairperson Manjula Mathews reflected on the company’s sustained growth and thanked those present for their continued support.

“We have achieved considerable progress over the past year thanks to the shared vision of all our stakeholders and propelled by a combination of teamwork, favourable market conditions and financial experience. We are sincerely grateful to our clients and other partners for their unstinting support as we progress on our journey towards becoming Sri Lanka’s leading investment bank.”

Elaborating on the company’s way forward, Mathews noted that the group plans to consolidate and build on the growth momentum of the past year by offering innovative and profitable investment banking solutions. Held at Cinnamon Grand, the reception brought together over 400 guests for a memorable evening of fellowship and entertainment and served as an occasion for the company to show its appreciation towards its regulators, collaborators, clients and members of the media.

The exclusive event provided an opportunity for the group’s senior management to engage and interact with all stakeholders and reaffirm the company’s commitment to strengthen and build on the trust and confidence placed in First Capital. During the first half of the financial year 2014/15, First Capital Holdings PLC reported profit after tax of Rs.868 million and received an upgrade in its national long-term and short-term corporate credit rating to A- /P2.

The company achieved several milestones such as the launch of a ‘Platinum Bond’ – the first-ever long-term repo investment product, pioneering the first ever microfinance-backed securitization and the introduction of three new unit trusts including a gilt-edged and money market unit trust. The First Capital Wealth Fund was lauded as the best performing fixed income unit trust over the past 12 months, with returns of over 25 percent. The corporate structuring arm of the company is accredited with the management of a landmark AAA-rated debenture, while First Capital Treasuries is currently the market leader in its niche, among standalone primary dealers.

Keenly attuned to the market and strengthened with a strong group research unit, First Capital Holdings PLC has recently added finance advisory services to its range of services in order to cater to the diverse needs of its clientele and provide superior investment banking solutions. First Capital Holdings PLC comprises of First Capital Treasuries Limited, First Capital Asset Management Limited, First Capital Equities (Private) Limited, First Capital Markets Limited and First Capital Limited. The company has a network of branches in Colombo, Matara, Negombo, Kandy and Kurunegala and is equipped with nearly three decades of experience in financial services.