IFC AMC invests US$ 75 mn in ComBank to support small businesses

IFC, a member of the World Bank Group, is investing $75 million (approximately Rs 9.6 billion) in Commercial Bank of Ceylon PLC, through a fund managed by its Asset Management Company (AMC), to expand Commercial Bank’s operations and increase access to finance for small and medium enterprises (SMEs).

Commercial Bank’s Managing Director and CEO, Ravi Dias (left) and Dr. Jin - Yong Cai, Executive Vice President and CEO of IFC exchange the agreement.

This investment with Commercial Bank is IFC’s largest investment in Sri Lanka’s financial markets to date, and is expected to increase access to finance for up to 16,000 small businesses and generate about 170,000 direct and indirect jobs by 2017 through lending to small and medium enterprises.

It is also IFC Asset Management Company’s first funding in South Asia, and the largest subordinated debt issued for any bank in Sri Lanka.

This investment through the AMC-managed IFC Capitalization Fund will qualify as capital to help Commercial Bank expand its operations, allowing for small businesses across the country to gain better access to credit.

The IFC Capitalization Fund was established in 2009 by IFC and the Japan Bank for International Cooperation.

The investment will be via a ten year subordinated loan to Commercial Bank that will also help bring in new foreign currency funding, and provide the Bank with capital to strengthen and expand its operations.

“This investment by IFC is much more than a milestone for Sri Lanka and Commercial Bank,” said Ravi Dias, the Bank’s Managing Director and CEO. “It will be a noteworthy infusion in to the national economy, given the significance of the SME sector. As Sri Lanka’s largest private bank, Commercial Bank is fully committed to exploring every possible opportunity to support post-conflict growth in the country.”

The investment is part of IFC’s efforts in Sri Lanka to promote economic inclusion by facilitating economic and financial integration across the country.

“This investment will help Commercial Bank expand financing options to the underserved – a key focus of IFC’s work in South Asia,” said Jin-Yong Cai, IFC Executive Vice President and CEO.

“The agreement also demonstrates Sri Lanka’s long-term potential as a destination for investment and should serve as a positive signal for international investors,” said Marcos Brujis, Head of the IFC Capitalization Fund.

IFC’s committed portfolio of $274 million in Sri Lanka covers projects across a range of sectors, including infrastructure, tourism, renewable energy, finance, and health care.