First Capital FI Report (27th Sep-23)

Welcome to the First Capital Equities Foreign Desk

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We offer comprehensive solutions for capital market investment opportunities in Sri Lanka.

Rasika Vidanalage
Head of Foreign Division
+94 77 707 2698 | rasika@firstcapital.lk

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Our equity financing solutions are customer-centric and crafted to meet the evolving needs of our clients. We ensure pragmatic solutions are offered at appropriate pricing and distribution with certainty. We act in multiple roles of Financial Advisor, Manager and Placement Agent during the transaction. Our capabilities include due diligence, pre-offer preparation, offer management, distribution strategy and after-market advisory Services. We undertake initial public offerings, secondary offerings such as rights issues, corporate actions including mandatory and voluntary offers, private placements and at-market placements of listed securities. Solutions span equity (ordinary and preference shares), quasi equity and equity linked products.

We offer expert advice on treasury management to assist companies to establish liquidity and manage financial risk. Our advisory capabilities extend to both cash management and investment. Our team can assist both private and listed companies to overcome challenges faced by treasury management.

We play a critical role in M&A transactions by providing strategic and financial advice aimed at delivering corporate or shareholder objectives in Mergers, Sales, Acquisitions, Leverage buyouts, Joint Ventures and Divestitures. Our role as a financial advisor operates across a wide spectrum of supporting activities involved in a given M&A transaction such as, provision of support and guidance in valuation and pricing, conduct due diligence inquiries, identify strategic buyers, provide capital structuring alternatives, prepare comprehensive offer documentation, negotiate terms of purchases/ acquisition and facilitate financing sources.

We offer customized Debt financing solutions to growth-oriented companies. Our Corporate Debt structures spans over a product spectrum of Listed debentures, Structured debt, Unlisted Debentures, Securitization and Commercial papers, featuring custom disclosure, credit enhancements, flexible payment structures and multiple maturities. As our distribution efforts are fully-integrated with an expansive investor base, we provide cost-efficient and diversified access to capital providers.

We also offer complete, end to end solutions for corporates who wish to raise Corporate Debt through public offers, by offering customized solutions in the capacity of Managers/ Financial Advisors and Placement Agents.

Our industry leading transactions are reflective of the ingenuity in enabling the most opportune financing processes for our clients.

This is an agreement between the First Capital and investor, where the First Capital agrees to borrow funds against Corporate Debt Instruments(i.e. Debentures or Trust Certificates) from an investor for a specific period, at an agreed rate of interest. Investor will be assigned Debentures or Trust papers as collateral for the investment.

Upon maturity of the agreement, the investor benefits by being entitled to the principal plus the interest for the period which could either be reinvested or recalled. 

• You will receive an attractive rate of return
• No withholding taxes
• Easy to convert to money even before maturity as in discounting
• Ability to use as a collateral

Debentures are medium or long term, interest-bearing bonds issued by private sector companies, banks, and other financial institutions. Debentures are usually issued by large, well-established institutions. Generally there are listed and unlisted debentures issued by the issuers.

Commercial papers are short-term, non-collateralized (unsecured) debt securities issued by private sector companies to raise funds for their own use, through banks and other financial intermediaries.

First Capital Holdings PLC is also an issuer of Rated and unrated commercial papers.

An asset-backed security is a security whose income payments and hence value is derived from and collateralized by a specified pool of underlying assets. The pool of assets is typically a group of small and illiquid assets which are unable to be sold individually.

For investors, asset-backed securities provide an alternative investment vehicle that provides higher yields and greater stability than the bonds. Asset-backed securities also provide portfolio diversification for investors looking to invest in other Financial Instruments.

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This fund primarily invests in Colombo Stock Exchange-listed stocks and is riskier than fixed-income investments. However, listed shares have higher profits than many other long-term investments. These types of investments are best suited for investors with a five- to ten-year investment goal.

The fund invests in corporate debt and government securities that mature within one year and give you the ability to withdraw funds at any time. This open-ended fund provides a great alternative for short term fixed deposits and savings accounts.

FCWF is an income fund that is open-ended and suitable for medium and long term investments. The fund invests in corporate debt and government securities and was the best forming fund in this class in both 2013 and 2014. First Capital wealth fund is ideal for income generation and capital growth and ensures higher returns in the long run than equivalent bank or finance company deposits.

We assist companies to achieve recovery and optimizing of shareholder value through restructuring transactions. Our expertise comprises traditional restructurings backed by transactional presence in the local capital market. Turn-around strategies include balance sheet rationalization restructuring and recapitalization.

We offer advisory services to small and medium enterprises to complement project financing. We focus on providing the transformational advice needed to obtain financial close. We evaluate and review a client’s financial model and business plans to build a compelling case to obtain requisite project financing. We can also offer structuring options that optimize cost.

We act as independent and objective advisors to a range of engagements spanning valuations to fairness opinions. Our team can determine the value of private companies, closely-held business interests, intangible assets and securities with public offerings/marketability in mind. Leveraging our valuation expertise we provide varied opinions including fairness, solvency and capital adequacy.

Treasury bills are issued by the Central Bank of Sri Lanka (CBSL) on behalf of the Sri Lankan Government through primary auctions. This short-term investment with maturities of 91, 182, and 364 days are considered default risk free.

Treasury bonds are issued by the Central Bank of Sri Lanka (CBSL) on behalf of the Sri Lankan Government through primary auctions. This medium to long term investments with a maturity period between 2 years to 30 years are considered default risk free and carry a semi-annual coupon payment.

Repo is an agreement for short-term borrowing for dealers who sell government securities such as treasury bills or bonds to investors. The agreement is signed between the bank and the investor, and it states the specified period of time for the borrowed funds and a mutually agreed rate of interest.

Leveraged trading or margin trading is trading on margins for higher profits. It can also be defined as the use of borrowed funds to acquire exposure to greater trading positions with a smaller amount of capital. This high risk strategy is used in the Foreign Exchange Market and requires extensive knowledge and experience to reduce risk.

A reverse repo is an agreement for the treasury bills or bonds lent by the bank to the client for a specified period of time and their mutually agreed rate of interest. The agreement is signed between the bank and the client, and it enables the customer to borrow short term funds from the government that they have already made an investment with a yield advantage.

Sri Lanka Development Bonds (SLDB) are issued by the Government of Sri Lanka and are eligible for investors, including non-resident Sri Lankans, Sri Lankan dual citizens, foreign citizens and entities, holders of personal foreign currency accounts and business foreign currency accounts, authorized foreign exchange dealers, Licensed Specialized Banks and Licensed Finance Companies that can accept deposits in foreign currency, Primary Dealers in Government securities and other specified companies. These bonds are USD denominated instruments, and their interest is paid every 6 months. For SLDB, The minimum investment amount is USD 10,000/- .

Investment Banking arm of First capital is the preferred investment banking partner offering an array of financial products and services in the areas of debt and equity structuring and distribution, mergers and acquisitions, Valuations, and corporate advisory services.
First Capital Investment Banking is a leading investment banker in Sri Lanka with an unparalleled track record and has pioneered the introduction of numerous innovative financial instruments.
We partner with our clients to bring ideas, insights, and capital to transform their businesses over the long term and to navigate the challenges of today as well as to realize the opportunities of tomorrow.
Clients of First Capital Investment Banking form a cross-section of key market players in the country within diverse industries and existence of strong partnerships which allows a broader representation, wider access and greater value to our clients.