People's Bank concludes plantation sector debenture

The People's Bank Investment Banking Unit which acted as the Manager to the Rs. 1 billion debenture issue of Kotagala Plantations PLC, concluded the issue successfully.

Total bids received were significantly higher than the issue amount and the issue closed on the opening day itself, reflecting high investor confidence in the company.

A significant feature of this issue is the creation of a sinking fund. To enhance credit, the company has set up a sinking fund to pay the debenture holders and the transfer of funds to the sinking fund is on a monthly basis.

The listed, rated, secured and redeemable debenture issue was assigned a BBB- rating by RAM Ratings and was managed by the People's Bank's Investment Banking Unit.

The other parties to the issue were trustees - Deutsche Bank AG, Colombo, lawyers - Nithya Partners, registrars - SSP Corporate Services Ltd, bankers - People's Bank and auditors - KPMG, Chartered Accountants.

Kotagala Plantations engages in the cultivation, manufacture and sale of tea and rubber and both products contribute more or less equally towards the company's revenue and profit.

The company is slowly moving into oil palm harvesting which they hope to expand in the future.

With nearly 53 years of banking experience, People's Bank initiated investment banking activities in 2011 to expand its footprint in investment banking and harness the opportunities arising from the rapid development of the economy and increase its offering to its corporate client base.

The Investment Banking Unit (IBU) consolidated its debt structuring activities via asset backed notes, commercial papers and debentures.

The IBU has gained a significant market share and has executed corporate debt issues for a number of corporates.

The IBU has the distinction of successfully managing the inaugural debenture issues in the spheres of housing, finance and the plantation sectors.

IBU plans to capitalise on the favourable environment at present for corporate debt activities, especially with the new tax incentives for listed corporate debt and capital market development initiated by the Securities and Exchange Commission.