FE Report

The NDB Capital Limited, a Sri Lanka-Bangladesh joint venture investment bank, formally launched its operation Wednesday to provide 'project structuring' and 'financing' services to the government's Public-Private Partnership (PPP) initiatives.

The investment bank is a subsidiary of the National Development Bank (NDB) of Sri Lanka, that acquired 77.80 per cent stake of the Capital Market Services Limited (CMSL), the first local merchant bank, in January 2009.

Back in 1998, the CMSL obtained its licence for full-fledged merchant banking from the Securities and Exchange Commission (SEC) and subsequently was renamed NDB Capital Limited.

"Structuring and feasibility study is the main thing of a project to make it successful and then comes the financing of the project," Kusal Jayawardana, chief executive officer of NDB Capital, told the FE.

"We can help the government in implementing PPP initiatives with our long experience in project structuring and financing in Sri Lanka."

NDB Group is one of the leading financial services conglomerates in Sri Lanka having stakes in commercial banking, development banking, investment banking, stock brokering, fund management and insurance.

The Group, which is now looking to expand its network in the North and East of Sri Lanka since the war is over, has expertise in structuring projects and arranging finances for these in diverse sectors such as power, manufacturing, textile and garments, telecommunication and infrastructure.

Under the PPP, which has been introduced this fiscal, energy and power, telecommunication and port development have got the highest priority. In addition, health, education, information technology, tourism, drinking water, sanitation etc have also been kept open to PPP initiatives.

The NDB Group has made an investment of Tk 77.80 million to buy the stake of the CMSL.

"Using the depth of knowledge and the long standing experience of NDB Group, NDB Capital can provide corporate finance solutions from structuring and placement of plain vanilla to highly complicated structured finance products," said Kusal.

Asked about the NDB's entry into Bangladesh's stock market, its Chairman Manik Nagahawatte said they entered into the Bangladesh market as the stock market has a huge potential to develop.

"We've also taken into account similar culture, laws, population and political stability to come to Bangladesh," he said.

NDB is not the first bank that enters into Bangladesh. It's the third Sri Lankan bank after the Commercial Bank of Ceylon and Sampath Bank, now in operation in Bangladesh. Sampath Bank has its investment in LankaBangla Finance.

NDB's experience in making financial products such as derivatives, commercial papers and securitisation as well as its global network would allow the new venture to provide efficient services to local and multinational companies as well as the government.

The product range of NDB Capital includes equity offerings, equity private placements, structuring and placement of corporate debt securities, securitisations or covered bonds, arranging syndicated loan facilities, underwriting, portfolio management and corporate advisory services such as share valuations, balance sheet restructuring, mergers and acquisitions, and feasibility studies.

"NDB capital has the ability to manage or facilitate the entire process for the client professionally and efficiently," Jayawardana said, adding, "We are also able to facilitate joint ventures between Sri Lanka and Bangladesh."

Commenting on Bangladesh stock market, Vajira Kulatilaka, chief executive officer of NDB Investment Bank, said Bangladesh market is growing very fast with the turnover increasing rapidly during the recent times.

"A range of instruments covering a wide area or sectors like education, information and regulations are the necessary tools for making the market vibrant," he said, adding that the NDB's Bangladesh chapter will also focus on organizing educational programmes for both investors and prospective issuer companies to strike a balance between an investor and an issuer.

Without a balance, the issuer may not get appropriate prices for their shares that may lead them not to be listed with the stock exchanges, while the investors may undervalue a issuer company, he said.

Asked about their future expansion plan, he said, "We have started the journey looking at the opportunity and this can be the first step of many things."