Fitch Ratings has placed the Outlook on Sri Lanka-based Abans Finance PLC’s National Long-Term Rating on Rating Outlook Evolving and has affirmed the rating at ‘A(lka)’. Fitch has removed the rating from Rating Watch Evolving (RWE).
KEY RATING DRIVERS
Abans Finance announced on 10 August 2021 that its proposed sale to Softlogic Capital PLC (SCAP) is no longer being pursued. The announcement has resulted in Fitch removing the RWE that it placed on Abans Finance’s rating on 7 October 2020, after the company announced on the Colombo Stock Exchange on 29 September 2020 that SCAP would acquire 49.67% of Abans Finance from Abans PLC (AA(lka)/Stable) – Abans Finance’s parent – then amalgamate with SCAP’s majority-owned Softlogic Finance PLC.
However, Fitch has now placed the Outlook on the company’s rating to Outlook Evolving to reflect the uncertainties around the potential for a disposal of Abans Finance by Abans group, which affects our assessment of Abans’ propensity to extend extraordinary support to its subsidiary.
We believe the parent’s intention to dispose of Abans Finance is evident from its proposed transaction with SCAP, although now abandoned, and its classification of the subsidiary as ‘Held for sale and discontinued operation’ in its financial statements. The parent’s stake in the finance company has also been diluted to 50%, from 89% in the financial year ending March 2016, due to capital infusions to meet regulatory requirements, which were mostly via its private-equity investor, Ironwood Investment Holdings Pvt Limited.
“Success is not final; failure is not fatal: it is the courage to continue that counts.” – Winston Churchill