Softlogic Finance in US $ 10 mn deal with FMO
Softlogic Finance has reached an agreement with the Dutch development
bank FMO, for a funding facility of US $ 10 mn . The facility will
enable financing of the important SME segment of the market. Softlogic
Finance is one of the few non banking financial institutions in Sri
Lanka to obtain foreign funding from a Development Finance Institution (DFI)
which is a reflection of the stability, track record and immense growth
potential of the company.
Tony Bakels, Head Financial Institutions Asia of FMO and
Ashok Pathirage, Chairman Softlogic Finance at the signing |
DFI’s that lend in developing markets such as Sri Lanka require local
lending institutions to maintain impeccable operating standards and
adopt international best practices to secure funding.
The signing ceremony for the US $ 6 mn Senior Secured Term Facility
of the first phase took place in Colombo on November 30, 2012. The
purpose of this senior secured term facility is to provide long term
funding to boost Softlogic Finance’s lending portfolio further in a bid
to meet the company’s strategic goals. The second phase, which is a
Subordinated Term Facility with the option to convert to equity, will
witness FMO releasing a tranche of US $ 4 mn. This facility will be used
to enhance Tier 2 capital to the company and concurrently to grow the
lending portfolio. The tenor period for the entire loan amount of US $
10 mn is five years.
Striving for the growth and competitiveness of the Small and Medium
Enterprise (SME) sector, Sri Lanka has often been identified as
imperative in order to provide more employment, bridge regional growth
disparities, and ensure that post-war growth is inclusive and
widespread. Several issues continue to hamper the faster growth of the
Sri Lankan SME sector; particularly the difficult access to finance.
Softlogic Finance has specialist knowledge and expertise in the SME
sector, and this funding line will be utilized to develop business with
customers who require financial assistance, to build their businesses
and improve their livelihoods.
Headquartered at The Hague in the Netherlands, FMO is a Dutch
development bank that finances companies, projects and financial
institutions from developing and emerging markets. It believes that
entrepreneurship is vital to create sustainable economic growth and to
improve quality of life, and it specializes in sectors where the
contribution can have the highest long-term impact such as financial
institutions, energy and agribusiness, and food and water. Commenting at
the signing, Tony Bakels, Manager Financial Institutions Asia of FMO
said:
“We are very pleased to commence a relationship with Softlogic
Finance who focus strongly on the SME sector, and will also be looking
to extend further cooperation with the Softlogic Group. We feel that
post conflict Sri Lanka has enormous growth potential and FMO is keen to
promote its mandate to develop business that in the final analysis will
contribute to sustainable growth,” Ashok Pathirage, Chairman Softlogic
Finance said, “We are delighted to commence this relationship with FMO
and are privileged to be counted amongst the few financial institutions
that match their lending profile. Sri Lanka needs to develop and uplift
her SME’s to achieve inclusive growth and Softlogic Finance with its
network and expertise will contribute their part. |