LOLC Micro Credit secures US $ 55.5 mn syndicated loan
Revolutionizing the Sri Lankan microfinance industry, LOLC Micro
Credit Ltd, (LOMC) secured the largest syndicated loan of US $ 55.5 mn
for the first time in Sri Lanka. This long term syndicated loan was
facilitated by a reputed consortium of Development Financial
Institutions (DFIs) from around the world.
Seated from left Ahdi Al-Hunaif (Investment Officer, OFID),
Betrand Milliot (CIO, Cordiant), Ishara Nannayakara (Deputy
Chairman, LOLC Group), Carole Mamman (Manager Financial Sector,
BIO), Claude Périou (CEO, Proparco) and Nico Pijl, (Chief Risk &
Finance Officer, FMO) Standing from left Lucas Lustermans (Legal
Counsel, FMO), Matthijs Egelie (Investment Officer, FMO), Bas
Rekvelt (Senior Syndications Officer, FMO), Tony Bakels (Manager
Financial Institutions Asia, FMO), Amelie July (Head of Banking,
Proparco) and Arno de Vette (Senior Officer Equity, FMO) |
LOMC, the micro-finance arm of LOLC Group is the only leasing company
that is exclusively dedicated for micro credit in the country.
Micro-finance is not an uncharted territory for LOLC. With the
initiation of the RERED project in 2003, LOLC has been relentlessly
involved in micro-finance providing ‘bespoke’ products to grass root
level entrepreneurs.
In 2009, LOLC carved out its micro portfolio to create a standalone
micro-finance institute together with FMO as an international
stakeholder who has a 20 % stake in LOMC.
FMO (Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden
N.V.), the AAA rated (S&P) Dutch Development Bank, was the lead arranger
to this transaction.
The other renowned participants include OFID (OPEC Fund for
International Development), BIO (Belgian Investment Company for
Developing Countries N.V.), PROPARCO (Société de Promotion et de
Participation pour la Coopération Economique S. A. – the French
Promotions Company for Economic Cooperation) and Cordiant Capital Inc.
(a Canadian DFI engaged in investing in emerging markets).
Cordiant made their maiden investment in Sri Lanka by participating
in this syndicate loan.
Most of these DFIs have a long standing relationship with LOLC. The
Group has one of, if not the largest, range of external funding partners
in the country, who work closely with the group in many endeavors.
They consider LOLC Group not only as their preferred conduit but also
as a catalyst to achieve their development and commercial goals, may it
be in SME development, micro enrichment, North and East resurgence or
renewable energy.
Their valued contribution beyond funding has enabled the group
companies to attain operational excellence, fine-tuned processes,
environmental standards, early compliance, good governance and
state-of-the-art IT systems.
As a case in point, FMO, plays a vital role in LOLC’s strategic
thinking and has introduced many international standards over the last
two and a half decades.
The introduction of environmental impact assessment in credit
appraisals, the mandatory emission testing for three wheelers, recycling
waste water to name a few.
The confidence FMO has on the group is further reflected by the fact
that they are not only the equity partner of LOMC, but also an equity
partner in group’s overseas investment - PRASAC - the largest micro
finance institution in Cambodia and presently exploring similar
opportunities in the region.
LOMC on the other hand, is one of the most preferred entities by
these DFIs for many reasons. It is the largest micro financier in North
and East, the largest agriculture equipment provider in the country,
made a reputation for empowering women entrepreneurs, renowned for its
distinctive business model and recruitment policy of fostering
indigenous school leavers.
Its unique Group loan model is another attractive feature. Designed
exclusively for women with rapid step up loan scheme, 95 % of the
borrowers graduate to individual level, to become an SME entrepreneur in
less than three years. The International funders are fascinated by the
positive contribution made by this product and the industry best NPL
ratio maintained in these group loans, reflect the commitment and
ability of working women in Sri Lanka. Thus, LOMC has become the most
sought-after micro-finance institution in Sri Lanka to the extent that
its portfolio is 100 % funded by foreign funding lines.
As a result, LOMC can comfortably withstand the rapid growth momentum
required by the micro-finance industry in Sri Lanka.
Today, LOMC stands out not only as the largest private sector
provider of micro-finance in the country with an outreach of 150,000
active borrowers, $ 110 mn loan book and $ 6mn – pre tax profit in the
FY 2011/12, but also as a model micro-finance house with high compliance
and governance. LOMC’s unique business model is also due to the fact
that it is empowered with a low cost channel network, a strategic
partnership with Sri Lanka Post, resulting more than 137 branches well
positioned across the island.
This syndicate loan is given in US $ and the company as a policy
secures all its foreign currency exposures 100 % through a back to back
hedging mechanism which is also a mandated by the Central Bank of Sri
Lanka. The signing ceremony between LOMC and FMO together with the
participating lenders took place on the of November 12, 2012, at an
official signing ceremony held at the FMO headquarters in Amsterdam,
Netherlands. Ishara Nanayakkara, Deputy Chairman of the LOLC Group
represented LOMC while Ahdi Al-Hunaif (Investment Officer, OFID),
Betrand Milliot (CIO, Cordiant), Carole Mamman (Manager Financial
Sector, BIO), Claude Périou (CEO, Proparco), Nico Pijl, (Chief Risk &
Finance Officer, FMO), Lucas Lustermans (Legal Counsel, FMO), Matthijs
Egelie (Investment Officer, FMO), Bas Rekvelt (Senior Syndications
Officer, FMO), Tony Bakels (Manager Financial Institutions Asia, FMO),
Amelie July (Head of Banking, Proparco) and Arno de Vette (Senior
Officer Equity, FMO) were also present. The funds raised from this
syndicated senior debt facility will be channeled towards the
development of the micro population of Sri Lanka, which according to the
GTZ study (2008) represents 50 % of untapped households in the country.
LOMC is poised to serve the micro clientele in the country to
alleviate poverty and uplift the living standards of a community that
once considered as “unbankable” by most of the formal lending channels.
This is a realistic dream for the LOLC Group, considering the revolution
it made three decades ago in pioneering leasing and factoring to the SME
sector, the most important segment to the national economy. |