First Capital Holdings with over 35 years of expertise operating in the capital market of Sri Lanka has investment solutions for everyone; from retail mutual funds for ordinary folk to structured corporate, sovereign debt instruments and equity trading for sophisticated investors with larger appetites. The prolonged lockdown due to the COVID-19 pandemic has brought the economy to a standstill and eroded investor sentiment to new lows. First Capital, however, is already seeing an encouraging turnaround, largely due to two reasons: a relentless commitment to its clients and sharp investment decisions that consistently yield market-beating returns.
A senior executive at First Capital Mahesh Amarasinghe – Assistant General Manager – Debt Structuring & Placement, managing a portfolio that serves the interest of both the investors and the issuing corporates, discuss the efforts that lead to success. For instance, by deploying technology, processes were quickly in place to ensure staff across the group were fully operational during the lockdown executing complex transactions and providing corporate clients finance advisory services to tide the cashflow crunch. A new online platform was introduced which helped clients monitor their portfolios and carry out transactions.
These sentiments were expressed by First Capital Holdings PLC, Senior Manager – Corporate Finance, Mahesh Amarasinghe to the Daily News.
Sri Lanka is too dependent on banks and financial institutions and it is of much importance to acknowledge the importance of the capital market. Banks and financial institutions are limiting both corporate and investors. What we need is a financial disintermediation, which would permit investors to access the capital market directly for cheaper funding.
Bringing down interest rates should be a priority, since Sri Lanka has probably one of the highest real interest rates in the world.
“For a business operating in Sri Lanka, the cost of capital is significantly higher than any where else in the world. We as an organization, have been advocating for better access to capital and we suggest that that banks and finance companies be incentivized to lend for investment, rather than consumption, because when interest rates are brought down, people use credit for consumption purposes and not contribute to the growth of the economy.
On the other hand, financial disintermediation means that Issuers or Borrowers – the companies that are seeking funds to grow should look beyond traditional sources of funds such as banking and financial institutions and find opportunities to directly access investors to directly get involved and lend to projects.
“This is what a vibrant capital market could do to grow business.”
“This is where Corporate Finance has a significant role to play as a full service investment bank operating in both debt and equity markets. We understand the changing economic and industry trends and provide both Issuers and Investors with new opportunities for businesses at attractive rates.
He commenting that the problem is that most lending entities too have traditional mind-sets on how they approach lending.
“For example, despite the prevalence and growth of IT, digital, and data-related companies, many banks are still reluctant to lend to them, as they have less understanding about the business, how it runs and how it could make profits.”
“In addition, we as Sri Lankans, have very little financial literacy so it makes life harder for entities looking for funding to pitch their proposals in an attractive manner.”
“Our teams are able to study and understand the financial position of corporates and structure customized solutions that are on their terms such as what rates they would wish to borrow at, if they are fixed or floating, matching cash flow and growth requirements of companies.”
On the other hand, investors are finding it difficult to place their funds due to caps on interest rates. “Traditionally, Sri Lankans are used to a financial landscape where people make deposits to banks and banks keep a margin and lend to businesses they perceive to be risk-free, but not really contributing to the economy.”
He said that the teams at First Capital would advise a client how the investor looks at the company and we advise on how to improve.
“When we see liquidity decreasing, our advise is to get the funding now, as we see trends of lack of liquidity in the market, while and these are part of the services we offer.”
Corporate Finance creates a more robust capital market structure that actually provide investors the opportunity of going directly into businesses and earn higher interest rates in addition to the security that is behind this type of instrument. “If you put a Fixed Deposit it’s just between you and the bank of the institution, whereas this would have a trustee, regulator if listed, a security to back the funds.”
We are a sponsor for SMEs to list them in the Empower Board. Specific license.
He also opined that listing or unlisted debt, there is a cost benefit to the issuer. So we advise them accordingly. Although unlisted costs less, sometimes it is better for a company’s brand or name if they are a listed with a publicized IPO.”
“IPOs are an ideal way for an investor who had not invested in this type of product earlier, because it is highly regulated with the CSE and SEC monitoring, a rating agency and a trustee and many other participants securing the process.”
Also for someone subscribing to a debt IPO, there is a set exit mechanism, because they could trade it on the secondary market.
“However, with the previously offered tax benefits no longer applicable, there is a significant benefit for corporates to do an unlisted issue, but to do so, there must be qualified investors who are experienced and understand the risks of the product.”
He said that they would look into it and would judge as to how these projects must be structured for the company to make the best of it. “Or we also would offer finding investment opportunities for investors who are looking for opportunities in the Securities Market for private placements or public offerings.”
Amarasinghe and his team recently closed a Rs. 5 billion Debenture for LOLC in a market where the company is over exposed.
Amarasinghe counts over 18 years of significant experience in Treasury and Securities Management through business operations and expertise gained as a Primary Dealer in and a Secondary Dealer of a range of fixed income securities.
He has extensive exposure in front and back-office operations and in customer relations in financial services.
Secondary market yield curve shifted upwards throughout the week and selling interest was seen actively on the 2019 maturities this past week. At the Primary bill auction 1-Yr bill saw its yield increasing by 5bps and the 3M bill was accepted at 8.33% nad its yield increased by 22bps. Despite being offered, the 6M bills was rejected for the twelth consecutive week. Overall market witnessed moderate volumes.
Liquidity & CBSL Holdings
CBSL Holdings was on a constant level throughout the week at LKR 50.5Bn.
Foreign holding decreased by LKR 4.1Bn to record at LKR 315Bn. Meanwhile, the overall government securities improved however, the overall foreign holding percentage dropped to 6.2%. Maturities for next Week
The Government securities market has Treasury Bill maturity amounting to LKR 28.0Bn.
Colombo 19th June 2017: First Capital Holdings PLC, a full service investment bank providing a diverse range of advisory services and financial products through its subsidiaries, (First Capital Group) reported a consolidated profit after tax of Rs. 231Mn for the year 2016/17 compared to Rs. 47Mn in the previous year.
The Group’s primary dealer arm, First Capital Treasuries PLC, was the main contributor towards the financial results recording a profit after tax of Rs. 343Mn for the year 2016/17 (2015/16 – Rs. 11Mn) attributed to net interest income and fair valuation gains on government securities. First Capital Treasuries, is the pioneer non-bank Primary Dealer appointed by Central Bank in 1982 and is listed on the Colombo Stock Exchange. Further, the company’s credit rating was reaffirmed by ICRA Lanka as A- with stable outlook.
The capital markets advisory of the Group, First Capital Limited, which specialises in structuring and placement of corporate debt securities, successfully mobilised Rs. 12.4Bn through structuring and placement of corporate debt securities. Despite the above performance First Capital Limited was negatively affected as a result of higher funding cost and fair valuation losses on trading securities.
The performance of the Group’s subsidiaries were further impacted due to damped investor sentiments as a result of the proposed changes to taxation via the budget proposal – 2017.
“Despite the setback experienced in the preceding quarters, the Group is optimistic in its outlook and have planned several calculated improvements to its operations” said Director / Group CEO, Dilshan Wirasekara.
First Capital Holdings PLC (the Company or First Capital) is a full service investment bank providing a diverse range of advisory services and financial products.
We currently serve an array of companies, institutions, government agencies, high net worth individuals and retail clients both international and local, who seek truly objective advice, innovative solutions and execution expertise. We operate throughout Sri Lanka via offices in Colombo, Kandy, Matara and Kurunegala. Our global outreach continues to expand through institutional trading and investment product placement.
As a company listed on the Colombo Stock Exchange (CSE) since 1994 (Ticker: CFVF), we exemplify requisite financial transparency and governance standards.
Reflecting credit fundamentals including a robust capital structure, liquidity, risk controls and earnings profile, we are rated A- by ICRA Lanka Limited.
Chief Financial Officer of First Capital Holdings Mangala Jayashanth receiving the Bronze Award for “Financial Institutions” category at the 52nd Annual Report Awards
Investment Bank First Capital Holdings PLC, won the Bronze Award for “Financial Institutions” category at the 52nd Annual Report Awards competition organised by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka).
Consisting of five subsidiaries providing a diverse range of advisory services and financial products including Capital Markets Advisory, Wealth Management, Fixed Income and Equities, First Capital Holdings PLC is the holding company deriving its income from the dividends from the group entities and income from its investments, which includes interest income and profit from investments. The company is listed on the Colombo Stock Exchange and is rated A- by ICRA Lanka Limited.
First Capital Finance Team presents Bronze Award for Financial Institutions category to company CEO. In picture; Manager Finance Dhilip Joseph, CEO Dilshan Wirasekara, CFO Mangala Jayashantha Senior Accountant Gihan Weerasinghe
“As a listed entity we strive to exemplify compliance, corporate governance, financial transparency, disclosure and effective communication in executing our business transactions. It is due to this focus on providing a true reflection of our fair value that we are able to provide a comprehensive viewpoint for the benefit of our shareholders, clients as well as in a broader context for our market participants” commented Chief Financial Officer of First Capital Holdings Mangala Jayashanth.
The theme for this year’s competition was ‘Precision Exemplified’ acknowledging publications that enhance Sri Lanka’s financial reporting standards to keep with global best practices of accountability, transparency and good governance.
Following a stringent process of analysis and evaluation the most outstanding Annual Reports of Sri Lankan companies be it a small-time non-profit organisation or a large-scale conglomerate were recognized at the gala event at under the patronage of honorable Minister of Finance Ravi Karunanayake with top corporate leaders and government officials also present.
First Capital’s Head of Research, Dimantha Mathew, speaks to Reuters Thursday Oct 27, 2016
Sri Lankan shares ended slightly firmer on Thursday, hovering near a 12-week closing low hit earlier in the week, in thin trade as investors awaited cues from the government budget and five-year plan as well as corporate earnings.
Prime Minister Ranil Wickremesinghe issued an economic policy statement in the parliament, giving some details of the government’s future economic policies, during market hours on Thursday. Dealers said the market was assessing the prime minister’s statement.
The benchmark index of the Colombo Stock Exchange ended 0.06 percent, or 3.61 points, firmer at 6,438.50. On Monday, the index had closed at its lowest level since August 1.
Thursday’s turnover was 204.7 million rupees ($1.38 million), less than a third of this year’s daily average of around 731.3 million rupees.
“Overall market is volatile and will move side ways until the budget,” said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd. “Uncertainty is there and investors are on wait-and-see mode.”
Foreign investors sold a net 18.4 million rupees worth of equities on Thursday. The net foreign inflow for the past eleven sessions through Tuesday was 1.23 billion rupees.
They have sold a net 1.81 billion rupees worth of shares this year.
Sri Lanka’s quarterly earnings season started two weeks ago, but most locally listed firms report in late October or early November. The national budget is scheduled to be presented on November 10.
Shares in Bukit Darah Company Plc jumped 3.72 percent while Dialog Axiata Plc rose 0.87 percent and Hatton National Bank Plc gained 0.75 percent.
($1 = 147.9000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)
First Capital’s Head of Research, Dimantha Mathew, speaks to Reuters Tuesday Oct 25, 2016
Sri Lankan shares edged up on Tuesday from a 12-week closing low hit in the previous session, but trading volume slumped to a more than 2-1/2-year low as investors awaited cues from the government budget and five-year plan as well as corporate earnings.
Sri Lanka’s quarterly earnings season started two weeks ago, but most of the firms listed locally reports in late October or early November. The national budget is scheduled to be presented on Nov. 10.
The benchmark index of the Colombo Stock Exchange ended 0.29 percent or 18.63 points higher at 6,436.97, edging up from Monday’s close of 6,418.34, its lowest since Aug. 1. The index fell 0.54 percent last week, its second straight weekly loss.
Tuesday’s turnover was 135.9 million rupees ($921,355.93), its lowest since March 17, 2014 and lower than a fifth of this year’s daily average of around 736.2 million rupees.
“It was a very dull day. It’s a waiting game now and nothing is happening,” said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.
“The equity market is dead and all are waiting for the government’s five-year plan and the budget.”
Stockbrokers said the market was also digesting political concerns over the resignation of the head of Sri Lanka’s anti-corruption body on Oct. 17, a few days after President Maithripala Sirisena implied that the agency was favouring the rival party of his prime minister.
This is likely to delay one of the promises of Sirisena’s coalition government, eliminating corruption, and could hurt business confidence, analysts said.
Foreign investors bought a net 17.6 million rupees worth of equities on Tuesday, in the eleventh straight session of net foreign inflows and bringing the total net inflows to 1.23 billion rupees over that period.
They have sold a net 1.74 billion rupees worth of shares this year.
Shares in Ceylon Tobacco Company rose 2 percent, while Carson Cumberbatch Plc rose 1.65 percent.
($1 = 147.5000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)
First Capital’s Head of Research, Dimantha Mathew, speaks to Reuters Monday Oct 24, 2016
Sri Lankan shares closed Monday at their lowest in 12 weeks in lean trade as investors awaited cues from the central government budget and the five-year plan ahead of corporate results.
Sri Lanka’s quarterly earnings season started two weeks back, but the bulk of locally listed firms will not report until late October or early November.
The national budget is scheduled to be presented on November 10.
The benchmark index of the Colombo Stock Exchange ended 0.45 percent or 29.19 points lower at 6,418.34, its lowest close since August 1. The index had fallen 0.54 percent last week, its second straight weekly loss.
“There is no improvement in the economic conditions and the uncertainty prevails, which is deterring the investors from taking long term position,” said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.
“Market is waiting for the government’s five-year plan and the budget. We see investors have switched to wait-and-see mode. Not many of them are looking at long term until some certainty comes into place.”
Turnover stood at 301.3 million rupees ($2.05 million), less than half of this year’s daily average of around 740 million rupees.
Stockbrokers said the stock market was also digesting political concerns over the resignation of the head of Sri Lanka’s anti-corruption body on October 17, a few days after President Maithripala Sirisena implied that the agency was favouring the rival party of his prime minister.
This is likely to delay one of the promises of Sirisena’s coalition government, eliminating corruption, and could hurt business confidence, analysts said.
Foreign investors bought a net 62.5 million rupees worth equities on Monday, extending the net foreign inflow for the past nine days to 1.21 billion rupees worth of shares.
They have sold a net 1.76 billion rupees worth of shares so far this year.
Shares in Ceylon Tobacco Company fell 2 percent after media reports suggested there could be a further hike in cigarette prices, while Commercial Leasing and Finance Plc lost 5.3 percent.
($1 = 146.9000 Sri Lankan rupees)
(Reporting by Shihar Aneez; Editing by Vyas Mohan)
First Capital’s Head of Research, Dimantha Mathew, speaks to Reuters Fri Oct 21, 2016
Sri Lankan shares ended slightly firmer on Friday, edging up from their lowest close in 1 month hit in the previous session, as foreign investors bought risk assets ahead of a flurry of corporate results and next month’s national budget. Sri Lanka’s quarterly earnings season started last week but the bulk of locally listed firms will not report until late October or early November. The national budget is scheduled to be presented on Nov. 10.
The benchmark index of the Colombo Stock Exchange ended 0.08 percent or 5.17 points firmer at 6,447.53, up from its lowest close since Sept. 20 hit on Thursday. The index fell 0.54 percent on the week, its second straight weekly loss. Turnover stood at 1.15 billion rupees ($7.81 million), the highest since Oct. 3 and more than this year’s daily average of around 741.5 million rupees.
“Today the market was a bit positive with some foreign inflows. Even though the quantity was low the foreign interest was there,” said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.
Stockbrokers said the stock market was also digesting political concerns over the resignation of the head of Sri Lanka’s anti-corruption body on Monday, a few days after President Maithripala Sirisena implied that the agency was favouring the rival party of his prime minister.
This is likely to delay one of the promises of Sirisena’s coalition government to eliminate corruption and could hurt business confidence, analysts said. Foreign investors bought a net 233.8 million rupees worth equities on Friday, extending the net foreign inflow for the past nine days to 1.15 billion rupees worth of shares. They have sold a net 1.82 billion rupees worth of shares so far this year.
Shares in Sri Lanka Telecom Plc rose 2.77 percent, while top conglomerate John Keells Holdings Plc ended steady.
($1 = 147.2000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)