Norwegian Development Finance Institution, Norfund has stepped into infuse funding in National Development Bank PLC (NDB) to overcome current challenges in the banking sector.
NDB and the Norwegian Development Finance Institution, Norfund, have reached an agreement for Norfund to invest up to 9.99% in National Development Bank PLC (NDB).
Under this agreement, Norfund will participate in the Rights Issue for Rs 8 billion that NDB has already announced by way of subscribing to unsubscribed rights and also by way of a private placement if required.
This investment is subject to other conditions, including regulator and shareholders approvals.
The investment comes at a time when international rating agencies have downgraded Sri Lanka’s credit rating.
This shows that Norfund endorses NDB’s resilience in a challenging environment and alignment to international standard, bank officials said. .
NDB Chairman Eshana De Silva noted that “Norfund’s decision to invest in NDB shows the confidence they have in NDB and the Sri Lankan Economy”
Group CEO of NDB Bank Dimantha Seneviratne commented that values Norfund will bring in terms of technical assistance, long term funding, know how etc will help the bank and the country overcome the current challenges.
As NDB strives to improve financial inclusion by promoting digital technologies, Norfund can make available its experience and technical assistance to help NDB improve in this area.
The equity investment by Norfund is the first foreign equity placement agreement for NDB bank. This will increase its foreign shareholding percentage to around 21%.
The Private Placement is priced at a 10% premium to the Rights Issue at LKR 82.5 per share.
This equity infusion together with the proposed Rights Issue will help buttress the Tier I capital of NDB bank enabling it to continue its growth momentum and support the economic revival in a post COVID environment.