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Central Bank approves Associated Motor Finance and Arpico Finance merger

25 Dec 2020

Merger to be completed before Q1 2021   The Central Bank of Sri Lanka (CBSL) yesterday (24) gave its approval for the planned merger of Associated Motor Finance Company PLC (AMFC) with Arpico Finance Company PLC (AFC) before 31 March 2021.  Issuing a corporate disclosure yesterday, AMFC stated the surviving company following the merger would be AMFC.   “The holders of 444,890 shares of AFC, constituting 5.98% of the issued shares of AFC, other than the 6,992,610 shares held by AMFC constituting 94.02%, shall receive 76 ordinary shares of AMF for every 100 shares of AFC,” the disclosure noted.    In terms of Section 241 (3) (a) of the Companies Act No. 7 of 2007, shares held by AMFC in AFC will be cancelled without payment of any consideration, when the amalgamation becomes effective.  AMF acquired 94% of shares in AFC in October 2014. The process of amalgamation was commenced in August 2017 and was expected initially to be completed by November 2019. In September this year, ICRA Lanka Ltd., a credit rating agency licensed by the Securities and Exchange Commission of Sri Lanka (SEC), stated that AMFC is expected to merge with AFP by December 2020. “AMF’s current business, post-merger, is expected to operate as a strategic business unit within the merged entity, specialising in two-wheeler financing. AMF group’s promoters are experienced professionals in financing business and are actively involved in the day-to-day business operations and decision-making and also hold board positions in both AMF and AFC,” ICRA stated.    Established in 1951, AFC operates through 10 branches today. The controlling interest of AFCP was acquired by Alliance Finance Group in 1967 from the original shareholders. With the consolidation drive initiated by the Central Bank, Alliance Finance Group divested its controlling interest to AMFC. AFC’s primary customer segments are the retail and small and medium enterprises (SME) sectors. The company’s key areas of operations are deposits, leasing and hire purchase, loans, and Islamic finance. The company operates through 10 branches. During the financial year 2020, AFC reported a net loss of Rs. 168 million on a total asset base of Rs. 13,434 million as compared to a Profit After Tax (PAT) of Rs. 373 million on a total asset base of Rs. 15,947 million in the previous financial year, according to ICRA. AMFC was established in 1962 and currently has a dealer network islandwide offering leasing with a portfolio comprising two-wheelers, cars, and vans. The group also specialises in mortgage loans, personal loans, and acceptance of time and savings deposits. As of 31 March 2020, the group total asset base was Rs. 20.336 billion. 


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