India's largest gold financing company Muthoot Finance Ltd has raised its holding in Sri Lankan financial services firm Asia Asset Finance PLC (AAF) and is making an open offer to up it further to gain majority ownership in the Colombo Stock Exchange-listed company, as per a stock market disclosure.
In August, Muthoot had acquired 29.98 per cent equity stake in AAF for $2.1 million from Asia Capital Plc, a significant shareholder of AAF, through a Colombo Stock Exchange transaction.
It has now acquired over 240 million more equity shares in AAF at a price of LKR 1.60 per share for LKR 384 million (approximately $2.9 million) as part of a rights issue. The total shareholding of the Kerala-based non-banking financial company in AAF has risen to 44.32 per cent.
AAF is a Sri Lanka-based registered financial company which is involved in retail finance, hire purchase & business loans through 11 branches. It is listed in Diri Savi Board of the Colombo Stock Exchange.
Following the latest acquisition, Muthoot is required to make a mandatory open offer to acquire additional shares in AAF, as per the requirement of Takeovers and Mergers Code 1995 of Sri Lanka, at a share price of LKR 1.60 per share, which is the highest price paid by Muthoot during the period of one year prior to 20 October 2014, the disclosure said.
Meanwhile, Asia Capital Plc and H L L M Nanayakkara, chairman of AAF, who together own 29.09 per cent stake in AAF, said that they will not sell their shareholding in the company during the proposed open offer.
However, if Muthoot fails to take the total shareholding in AAF to 51 per cent in the open offer, Asia Capital would sell off such number of shares required for Muthoot to secure a total holding of 51 per cent.
Muthoot Finance is the flagship company of the Muthoot group, which is also into hospitality, healthcare, media, education, information technology, foreign exchange, insurance distribution and money transfer businesses.
(Edited by Joby Puthuparampil Johnson)