Dialog Axiata PLC Initial Public Offering
Richard Pieris Distributors Limited, credit card receivables securitization
Richard Pieris Distributors Limited
Credit Card Receivables Securitization - Case Study
  • NDBIB acted as the Structuring and Placement Agent for the raising of funds over Rs. 1 Billion via a securitization of future credit card receivables during the year 2010.
  • Richard Pieris Distributors Limited (RPD), a fully owned subsidiary of Richard Pieris and Company PLC (RPC) operates the well known Arpico chain of Supercentres, Super Stores, and Showrooms Island wide. NDBIB was mandated to raise Rs. 1,000 Million over a five year period via the securitization of future credit card receivables of the selected Arpico Super Market outlets from a consortium of banks/financial institutions. The proceeds raised were to part finance the expansion of the Arpico chain of Supercentres, Super Stores, and Showrooms to capitalize on the increasing popularity of supermarkets in recent times among modern day Sri Lankan customers due to the availability of a wide range of products, including groceries and general merchandise under one roof at an affordable price.
  • Carried out a detailed Study of the credit card industry and super market industry of Sri Lanka.
  • Carried out a detailed statistical analysis on the past data of credit card receivables RPD has obtained through the Arpico chain of Supercentres to derive the future cashflow patterns and select the appropriate credit card receivables;
  • Determined the percentage of cashflows to be securitized against the selected credit card receivables;
  • Facilitated the securing of cashflows within the Escrow Account selected for the transaction;
  • Structured an appropriate debt instrument which can be issued by RPD to raise funds from the investors;
  • Designed appropriate credit enhancements for investors;
  • Placed the debt instruments with investors;
  • Facilitated the preparation and execution of the legal structure and documents for the transaction;
  • Liaised with RPD's professional advisors and the Escrow Agent of the Escrow Account to facilitate the execution of the transaction.
  • This securitization of future credit card receivables was the FIRST fund raising to be carried out in Sri Lanka via a securitization of future credit card receivables.
  • RPD required long term funding for a period of five years through a fixed rate unsecured debt facility. Local banks were not willing to provide debt facilities under these terms due to the risks involved. NDBIB was able to develop a safe structure to overcome this mismatch by capturing the credit card receivables at the point of collection and transferring the same to a special Escrow Account managed by the lead bank to the transaction. The structure allowed RPD to raise funds only by providing security in the form of a mortgage over the future credit card receivables of the selected supermarket outlets and without the mortgage of any tangible assets. This enabled the facility to be successfully placed with the participation of 3 banks/financial institutions.
Achievements : Largest Equity offering on the CSE - Rs. 8.6 Billion Dialog Axiata PLC.
Achievements : Largest Rights Issue - Rs. 15.55 Billion Dialog Axiata PLC.
Achievements : Largest Preference Share Issue - Rs. 5.0 Billion Rated, Cumulative, Redeemable for Dialog Axiata PLC.
Achievements : Largest Lease securitization in a single tranche - Rs. 1.06 Billion for People's Leasing
Achievements : Largest Utility based securitization - Rs. 1.43 Billion for Ceylon Electricity Board
Achievements : Largest IPO Oversubscription - 344.98 times for Union Bank
Achievements : Largest Funds Subscribed - Rs. 129.37 Billion Union Bank
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