33889 - SFCL Senior Loan

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Summary of Investment Information

Project Number

33889

Company Name

SENKADAGALA FINANCE PLC

Date SPI Disclosed

Dec 18, 2013

Country

Sri Lanka

Region

South Asia

Projected Board Date

Jan 20, 2014

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Jan 31, 2014
Signed : Feb 17, 2014
Invested : Apr 4, 2014

Sector

Finance Companies

Project Description

Senkadagala Finance PLC (“SFCL” or the “Company”), is a finance company established in 1968, licensed and regulated by the Central Bank of Sri Lanka. The company has been assigned a local currency credit rating from Fitch Ratings of BBB+ (lka) with a Stable outlook and the rating was affirmed in November 2013. Principal lines of business of SFCL comprises of finance leases and hire purchases to the MSME market. The Company also accepts public deposits. The proposed IFC project comprises of a senior loan (the “Loan”) of up to US$ 7 million for a tenor of 5 years.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	7.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Access to Finance: Three decades of conflict in the past had limited the Government''s capacity to support MSMEs and thereby to allocate crucial resources to boost lagging incomes. This Project will help address this constraint by funding SFCL''s expansion and promoting financial inclusion by means of financing of MSMEs and women borrowers.

Private Sector Development: The Project would facilitate private sector development via access to credit for growing MSMEs in Sri Lanka. Given the importance of MSMEs in Sri Lanka, the cascading effect of this finance would contribute to creating employment, reducing poverty and stimulating the economy.

Longer Tenor: This project will provide long term financing not readily available in the local market. This would support the Company to expand its MSME operations and expand its reach.

Stamp of Approval: IFC''s association with the project will add further credibility to the Company amongst other international investors, rating agencies and regulators. This will also improve access to other long term domestic institutional funding sources and reduce the overall funding cost for the company.

Improving E&S Standards: implementing IFC''s E&S performance standards will help improve the E&S standards of the Company as well as that of its many MSME clients.

Technical, industry & global knowledge: IFC Advisory Services is expected to play a pivotal role in providing access to international best practices especially with respect to refining SFCL''s risk management systems, market expansion strategies (particularly in North-East Sri Lanka), sector knowledge, technology (Eg: mobile banking) and global network.

E&S Category Rationale / Risks and Mitigation

The lending profile of SFCL is primarily limited to financing of vehicles which includes 60% for personal use and the remaining for commercial purposes. As at September 2013, both hire purchase and leasing comprise 49.5% each of the total portfolio of the Company. There is no finance to vehicle dealers. Overall, the lending portfolio has limited adverse environmental or social risks or impacts that will be few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. Hence, the E&S risk of the proposed investment is medium and the project is categorised as FI-2. The applicable Performance requirements will be i) the IFC- FI Exclusion List; and ii) The host country E&S laws and regulations.

Contacts

For Inquiries About the Project, Contact

Senkadagala Finance PLC,
2nd Floor,
267, Galle Road,
Colombo 3,
Sri Lanka.
Email: mailto:senk@senfin.com
Telephone: +94 11 2 301 301
Fax: +94 11 2 301 055

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Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Task Title & Description	Anticipated Completion Date	Status	Comments	Completion Date
Nominate officers		Completed	Completed	02/12/2014
Establish SEMS		Completed	Completed	03/27/2014
Staff Training		Completed	Completed	03/31/2015
Upgrade HR Policy		Completed	Completed	01/16/2014

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