First Capital Holdings PLC has announced the appointment of Tharusha Ekanayake as its Chief Operating Officer (COO) with effect from 09th November 2020. A banking and finance professional, he previously held the role of Vice President / Deputy Head of Treasury – Nations Trust Bank PLC. Tharusha brings 21 years of experience in financial services, spanning Fixed Income Securities, Treasury and Investment Banking activities.
ICRA Lanka has taken a consolidated view of the First Capital group, comprising of First Capital Holdings PLC and its subsidiaries, which is involved in a range of financial services such as primary dealership, equity trading, corporate advisory, debt structuring and asset management. There is a strong interlink between the entities through sharing of a common brand, management team, systems and group treasury functions.
The ratings upgrade factors in the status of the company as the holding company of First Capital Treasuries PLC, the leading standalone primary dealer currently in Sri Lanka with an issuer rating of [SL]A with Stable outlook. The ratings upgrade also factors in the improvement in the capital and gearing profiles, good market position offering diverse financial services, a strong senior management team, risk management processes to reduce market and operational risks, as well as improvement in the capitalization profile through healthy internal generation.
ICRA Lanka Limited, has upgraded the issuer rating of First Capital Treasuries PLC (FCT or “the Company”) to [SL]A (pronounced SL A) from [SL]A- (pronounced SL A minus).
ICRA Lanka has also upgraded the issue rating of the LKR 750 Mn Subordinated, Unsecured, Redeemable Debenture programme of FCT to [SL]A- (pronounced SL A minus) from [SL]BBB+ (pronounced SL triple B plus).
The issue rating of [SL] BBB+ (pronounced SL triple B plus) with stable outlook for the LKR 500 Mn Subordinated, Unsecured, Redeemable Debenture programme of the company has been withdrawn as the said debentures have matured and there is no amount outstanding against the rated instrument. The outlook on the long term ratings remains Stable.
ICRA Lanka has taken a consolidated view of the First Capital group (comprising of First Capital Holdings PLC and its subsidiaries), which is involved in a range of financial services such as primary dealership, equity trading, corporate advisory, debt structuring and asset management. There is a strong interlink between the entities through sharing of a common brand, management team, systems and group treasury functions.
The ratings upgrade considers the healthy performance of FCT (a subsidiary of First Capital Holdings PLC rated [SL]A), following the robust earnings of LKR 1,208 Mn and LKR 1,356 Mn in FY2020 and Q1 of FY2021, respectively, in comparison to LKR 96 Mn in FY2019 (LKR 1,671 Mn in FY2018).
First Capital Asset Management Ltd., the managers of the First Capital Wealth Fund, has announced a dividend of Rs. 100 per unit for the year 2019/20.
The fund has delivered a return of 11.14% (Compounded Annual Growth Rate) since inception as at 5 October. ‘Astute assessment of market opportunities, leveraging on interest rate fluctuations and prudent management is attributed to the successful growth of the unit trust funds under our management,” said First Capital Asset Management Ltd. AGM – Asset Management Kavin Karunamoorthy.
“Utilising our expertise as a specialised knowledge and industry expert, in debt market services and prominent non-bank primary dealer in Sri Lanka, we are confident that the unit trusts managed by First Capital Asset Management Ltd. will continue to reap the rewards of timely, well-informed investments,” he added.
First Capital Asset Management, a subsidiary of First Capital Holdings PLC, is licensed and approved by the Securities and Exchange Commission of Sri Lanka (SEC) while Bank of Ceylon (BOC) acts as the trustee and custodian for the fund.
The company specialises in managing investments for high net-worth individuals, trusts and companies. First Capital Asset Management Ltd. is a subsidiary of First Capital Holdings PLC which offers investment solutions in fixed income, equities, wealth management and capital markets advisory.
The results are reported on the back of a robust performance for year 2019/20, where the Group posted a Consolidated Profit after Tax of LKR 1.07Bn for the year. First Capital, with an impressive history of over 35 years, currently has total assets of LKR 32.5Bn and Equity of LKR 4.9Bn.
The Group’s Primary Dealer operations were positively impacted by the CBSL’s efforts to revive the economy through monetary policy easing measures to counter the COVID-19 pandemic impact, with the business reporting a Profit after Tax of LKR 1.36Bn for the quarter (2019/20 – LKR 562Mn).
The Corporate Finance division too recorded notable results, mobilising LKR 3Bn for its clients through structuring and placement of corporate debt securities, generating a fee income of LKR 25Mn for the quarter (2019/20 – LKR 31Mn).
The Wealth Management division of the Group delivered a strong performance reporting a fee income of LKR 17Mn for the quarter (2019/20 – LKR 11Mn) amidst challenges faced during the COVID-19 lockdown period. The division showed a growth in assets under management to end with LKR 27.9Bn as at 30th June 2020 (31st March 2020 – LKR 26.4Bn).
Despite the setback experienced in the first quarter of 2020, with the CSE remaining closed for 7 weeks, the Group’s Stock Brokering division recorded revenue of LKR 14Mn for the quarter (2019/20 – LKR 06Mn).
Colombo 12 August 2020: First Capital Holdings PLC (the Group) the only listed investment institution in Sri Lanka, recorded a Consolidated Profit after Tax of LKR 1.07Bn for the year 2019/20, amidst negative headwinds that saw Sri Lanka, reporting subpar economic growth for the third consecutive year. The results show a significant growth compared to LKR 8Mn in the previous year. First Capital, with an impressive history of over 35 years, has total assets of LKR 45.6Bn and Equity in excess of LKR 4Bn.
“Our ability to deliver impressive results even in tough times, is a testament to the Group’s robust operating model. I am convinced that the ongoing emphasis placed on strengthening each of our core businesses and firming up their positions within their immediate operating domain, has been a critical success factor for the Group”, commented Chairman, First Capital Holdings PLC, Nishan Fernando.
The Group’s Primary Dealer contributed LKR 1.2Bn (2018/19 – LKR 96Mn) Profit after Tax for the year, claiming a substantial volume-based market share in both the primary auctions as well as in the secondary market during the financial year.
Capitalising on the potential in the listed and unlisted debt market, the Corporate Finance division mobilised LKR 42Bn for its clients through structuring and placement of corporate debt securities, generating a fee income of LKR 175Mn (2018/19 – LKR 69Mn).
The Wealth Management division of the Group, made remarkable progress to deliver its best financial results to date, reporting a fee income of LKR 64Mn (2018/19 – LKR 33Mn). The division showed a significant growth in its assets under management to end with LKR 26.4Bn as at 31st March 2020 (31st March 2019 – LKR 5.9Bn).
First Capital Holdings with over 35 years of expertise operating in the capital market of Sri Lanka has investment solutions for everyone; from retail mutual funds for ordinary folk to structured corporate, sovereign debt instruments and equity trading for sophisticated investors with larger appetites. The prolonged lockdown due to the COVID-19 pandemic has brought the economy to a standstill and eroded investor sentiment to new lows. First Capital, however, is already seeing an encouraging turnaround, largely due to two reasons: a relentless commitment to its clients and sharp investment decisions that consistently yield market-beating returns.
A senior executive at First Capital Mahesh Amarasinghe – Assistant General Manager – Debt Structuring & Placement, managing a portfolio that serves the interest of both the investors and the issuing corporates, discuss the efforts that lead to success. For instance, by deploying technology, processes were quickly in place to ensure staff across the group were fully operational during the lockdown executing complex transactions and providing corporate clients finance advisory services to tide the cashflow crunch. A new online platform was introduced which helped clients monitor their portfolios and carry out transactions.
These sentiments were expressed by First Capital Holdings PLC, Senior Manager – Corporate Finance, Mahesh Amarasinghe to the Daily News.
Sri Lanka is too dependent on banks and financial institutions and it is of much importance to acknowledge the importance of the capital market. Banks and financial institutions are limiting both corporate and investors. What we need is a financial disintermediation, which would permit investors to access the capital market directly for cheaper funding.
Bringing down interest rates should be a priority, since Sri Lanka has probably one of the highest real interest rates in the world.
“For a business operating in Sri Lanka, the cost of capital is significantly higher than any where else in the world. We as an organization, have been advocating for better access to capital and we suggest that that banks and finance companies be incentivized to lend for investment, rather than consumption, because when interest rates are brought down, people use credit for consumption purposes and not contribute to the growth of the economy.
On the other hand, financial disintermediation means that Issuers or Borrowers – the companies that are seeking funds to grow should look beyond traditional sources of funds such as banking and financial institutions and find opportunities to directly access investors to directly get involved and lend to projects.
“This is what a vibrant capital market could do to grow business.”
“This is where Corporate Finance has a significant role to play as a full service investment bank operating in both debt and equity markets. We understand the changing economic and industry trends and provide both Issuers and Investors with new opportunities for businesses at attractive rates.
He commenting that the problem is that most lending entities too have traditional mind-sets on how they approach lending.
“For example, despite the prevalence and growth of IT, digital, and data-related companies, many banks are still reluctant to lend to them, as they have less understanding about the business, how it runs and how it could make profits.”
“In addition, we as Sri Lankans, have very little financial literacy so it makes life harder for entities looking for funding to pitch their proposals in an attractive manner.”
“Our teams are able to study and understand the financial position of corporates and structure customized solutions that are on their terms such as what rates they would wish to borrow at, if they are fixed or floating, matching cash flow and growth requirements of companies.”
On the other hand, investors are finding it difficult to place their funds due to caps on interest rates. “Traditionally, Sri Lankans are used to a financial landscape where people make deposits to banks and banks keep a margin and lend to businesses they perceive to be risk-free, but not really contributing to the economy.”
He said that the teams at First Capital would advise a client how the investor looks at the company and we advise on how to improve.
“When we see liquidity decreasing, our advise is to get the funding now, as we see trends of lack of liquidity in the market, while and these are part of the services we offer.”
Corporate Finance creates a more robust capital market structure that actually provide investors the opportunity of going directly into businesses and earn higher interest rates in addition to the security that is behind this type of instrument. “If you put a Fixed Deposit it’s just between you and the bank of the institution, whereas this would have a trustee, regulator if listed, a security to back the funds.”
We are a sponsor for SMEs to list them in the Empower Board. Specific license.
He also opined that listing or unlisted debt, there is a cost benefit to the issuer. So we advise them accordingly. Although unlisted costs less, sometimes it is better for a company’s brand or name if they are a listed with a publicized IPO.”
“IPOs are an ideal way for an investor who had not invested in this type of product earlier, because it is highly regulated with the CSE and SEC monitoring, a rating agency and a trustee and many other participants securing the process.”
Also for someone subscribing to a debt IPO, there is a set exit mechanism, because they could trade it on the secondary market.
“However, with the previously offered tax benefits no longer applicable, there is a significant benefit for corporates to do an unlisted issue, but to do so, there must be qualified investors who are experienced and understand the risks of the product.”
He said that they would look into it and would judge as to how these projects must be structured for the company to make the best of it. “Or we also would offer finding investment opportunities for investors who are looking for opportunities in the Securities Market for private placements or public offerings.”
Amarasinghe and his team recently closed a Rs. 5 billion Debenture for LOLC in a market where the company is over exposed.
Amarasinghe counts over 18 years of significant experience in Treasury and Securities Management through business operations and expertise gained as a Primary Dealer in and a Secondary Dealer of a range of fixed income securities.
He has extensive exposure in front and back-office operations and in customer relations in financial services.