Softlogic Finance plans to raise Rs1.002 billion through a rights issue as the non-bank financial institution seeks to strengthen its Tier 1 Capital and expand its lending portfolio, particularly vehicle financing.
Softlogic Finance seeks fresh capital to expand lending, particularly vehicle financing
Softlogic Finance PLC plans to raise Rs1.002 billion through a proposed rights issue, with the company seeking additional capital to support its balance sheet and expand lending activities.
Under the proposed rights issue, the company will offer 401,072,162 new ordinary voting shares at Rs2.50 per share. Eligible shareholders will be entitled to subscribe for five new ordinary voting shares for every 12 existing ordinary voting shares held.
The proposed capital raising represents a move by Softlogic Finance to strengthen its capital base while creating additional capacity for lending growth. According to the company, the proceeds will be directed towards strengthening Tier 1 Capital and expanding its lending portfolio, with vehicle financing identified as a particular area of focus.
Softlogic Finance currently has 962,573,191 ordinary voting shares in issue. Its stated capital stands at approximately Rs2.32 billion, according to information provided by the company.
The proposed issue would increase the number of ordinary voting shares substantially if fully subscribed. At the issue price of Rs2.50 per share, the company expects to raise approximately Rs1.002 billion in gross proceeds.
For a non-bank financial institution, maintaining an adequate capital base is important as lending operations expand. Additional Tier 1 capital can provide greater capacity to support asset growth while helping the institution maintain its capital position as its loan portfolio increases.
The emphasis on vehicle financing also reflects the company’s stated intention to deploy the additional capital towards a specific lending segment. Vehicle financing forms part of the broader credit market in Sri Lanka, where finance companies provide funding to individuals and businesses purchasing vehicles and other assets.
Softlogic Finance said the proposed transaction is intended to support the expansion of its lending portfolio while strengthening its capital position. The company’s proposed rights issue therefore combines a balance-sheet objective with plans for business growth.
However, the transaction has not yet received all required approvals. The proposed share issue remains subject to regulatory and shareholder approval before it can proceed.
The final implementation of the capital raising will depend on the relevant approvals and the subsequent rights issue process. Shareholders will also have the opportunity to consider the proposal under the terms set out by the company.
If approved and fully subscribed, the Rs1.002 billion capital injection would provide Softlogic Finance with additional financial resources to support lending growth. The company’s focus on vehicle financing indicates where it expects at least part of this additional capacity to be deployed.
The announcement comes as Sri Lanka’s financial sector continues to balance lending growth with capital and funding requirements. For finance companies, maintaining adequate capital is particularly important when expanding credit exposure, as stronger capital buffers can support the ability to grow lending while meeting regulatory requirements.
For existing shareholders, the proposed five-for-12 entitlement provides an opportunity to participate in the capital raising and maintain their proportional ownership, subject to their decision to subscribe. The issue price of Rs2.50 per share and the final terms will determine the level of participation and capital raised once the necessary approvals are secured.
Softlogic Finance’s proposed capital raising will therefore be closely linked to its plans for lending expansion and the strengthening of its financial position. The company is now required to obtain regulatory and shareholder approval before moving ahead with the proposed share issue.