With the goal of stepping up their game into the Digital financial service, Dialog Axiata PLC yesterday acquired 80.34% stake on Colombo Trust Finance PLC, for a total of Rs. 1.072 billion.
In case you didn’t know, just to give you a small background about the company, CTF is a finance company licensed and registered by the Central Bank of Sri Lanka (CBSL). It operates under the Finance Business Act No. 42 of 2011, and has assets worth Rs 1.3 Billion and liabilities of around Rs. 856 Million. The company was previously known as Capital Alliance Finance PLC but was then purchased by Cargills Group in August 2014 at Rs. 15.50 per share. In comparison, Dialog Axiata paid Rs, 18.70 per share.
With regard to legal aspects, the transaction has been granted approval by the Monetary Board of the Central Bank. In keeping with the Takeovers and Mergers Code of the Securities and Exchange Commission, Dialog Axiata PLC will go forth to announce a obligatory offer to the remaining shareholders of CTF. These are Lankem Ceylon who own 7.26% of shares, Divasa Equity who owns 3.8% of shares and HV Lanka Exporters, who own 2% of shares. As for the public, a total percentage of 11.40% is owned by the public and the number of shareholders representing the public holding was 699 as of 30 June 2017.
Why did Dialog Axiata do this?
Dialog sees this as a way of merging digital connectivity with Financial Technology (FinTech), in order to develop a new lineup of products and services that will expand the paths of Finance in Sri Lanka. According to Dialog, the acquisition would enable the expansion of the scope of operations of the Axiata group into mainstream digital financial services. As such, this would enable greater focusing on increasing the affordability and the adoption of digital devices and services by a wide spectrum of consumers and businesses.
With Dialog’s eZ cash mobile payment service, Dialog made a name for themselves in the world of financial services in 2012. 5 years on, eZ Cash has over 2.8 million Mobile Payment subscribers from across the Etisalat, Hutch, and Dialog Mobile Networks.
CTF will function in parallel to the Digital Services portfolio of the Dialog Group. These include WoW.lk (a leading e-commerce portal operated by Digital Commerce Lanka), Doc.lk operated by Digital Health Ltd. and Guru.lk, a digital education service operated by Headstart Ltd.