Sri Lankan strategists dominate the market

NDB Investment Bank has implemented innovative debt and equity tactics in local capital markets for over a decade. Vajira Kulatilaka, NDBIB Director and CEO of NDB Capital Holdings, and Darshan Perera, CEO of NDBIB, discuss the company’s next step: its global reach

 
September 13, 2013

NDB Investment Bank (NDBIB) was established in 1997 as Citi National Investment Bank, a joint venture between National Development Bank (NDB) and Citibank N.A. Over the years, NDBIB has harnessed the local expertise of NDB to emerge as the market leader for both debt and equity structuring and placement, and advisory services.

The bank was awarded as Best Investment Bank in Sri Lanka by World Finance for its continuous excellence in the investment banking sphere of Sri Lanka. This follows a string of other awards received by NDBIB by Euromoney, consecutively in 2012 and 2013, and by Global Banking and Finance Review in 2013.

The emergence of a banking giant
NDB acquired Citibank’s shareholding in 2009, thereby taking NDBIB under its wing as a fully owned subsidiary and positioning the company to drive the investment banking operations of NDB Group. NDB Group further enhanced its unique capital markets service offering with stockbroking services provided, via NDB stockbrokers, the acquisitions of NDB wealth management – the largest private sector wealth management company in Sri Lanka, and NDB Capital, an investment banking operation in Bangladesh.

The pioneering investment banking cluster within the NDB Group was restructured in 2012 with all capital markets-related service providers being transferred to and managed by NDB Capital Holdings (NCAP), a 99.6 percent owned subsidiary of NDB. NCAP further augmented the capabilities of NDBIB by bringing substantial funding available for the execution of fund-based investment banking activities.

The bank benefits from the synergies provided by the local group network, global working relationships and customer base of its parent company, as well as on strong relationships developed with major commercial banks, unit trusts and pension/provident funds who actively participate in deals originated by the company. NDBIB provides its clients with advisory services in the areas of debt and equity structuring and distribution, corporate restructuring, mergers and acquisitions, initial public offerings, equity placements, privatisation and infrastructure development.

The company also maintains an excellent working relationship with regulatory authorities such as the Colombo Stock Exchange (CSE) and the Securities and Exchange Commission. In 2011, NDBIB also strengthened its international reach through a strategic alliance with DBS Bank, Singapore, one of Asia’s largest banks. The alliance has enabled NDBIB to access vibrant foreign capital markets for the benefit of its clients across a broad range of areas including, mergers and acquisitions, syndicated loans, project finance and equity placements.

NDBIB thrives on its ability to furnish its clients with optimum prices and placement of issues with local and foreign investors on equitable grounds. The company has directed and managed several successful public offerings, including the largest ever equity issue on the Colombo bourse. It continues its strategy to provide value addition through innovative products and services. The success of its efforts is evidenced by the fact that NDBIB serves as a trusted advisor and secures repeat mandates from many of the blue chip companies listed on the CSE.

National market leadership
NDBIB is the market leader on both debt and equity capital markets in Sri Lanka. The company enjoys over 50 percent market share in all verticals of service offerings. It dominates the equity capital markets space in terms of funds raised, having managed three of the four largest IPOs on the CSE to date, the top three IPOs on the CSE in terms of the quantum of funds subscribed and the top two IPOs in terms of oversubscription level.

The company has extended its leadership in the debt capital markets space as the main debt house in Sri Lanka by meeting its clients’ funding requirements via securitisation of lease and hire purchase receivables, tea auction sales for plantation companies and credit and debit card receivables, commercial papers, debentures and syndicated loans. The corporate advisory team at NDBIB is the industry-leading financial advisory unit in Sri Lanka for mergers and acquisition, restructuring transactions, valuations and diagnostic studies.

NDBIB has extensive experience in sectors such as manufacturing, insurance, plantations, beverages, banking, finance, textiles and telecommunications. Of the assignments undertaken, NDBIB has an unblemished success rate of 100 percent completion and implementation. Over the years, NDBIB has gained a reputation for being thorough in work processes and issuing instruments, which minimise risks to the investors and thereby reduce cost of funds to the client instruments.

The company has been at the forefront of the industry, having pioneered the introduction of many innovative structures and instruments for the local capital markets

The company pioneered the introduction of a number of financial products and services to the Sri Lankan financial market, and was the first to initiate the book-building process for pricing initial public offerings in Sri Lanka via the Lanka IOC IPO in 2004 and also introduced the tender process at an equity private placement in 2010.

The company has secured a distinctive name for the introduction of cross border swaps and securitisations bespoke for clients in diverse industries, namely utilities, plantation, retail and finance sectors. A case in point is the recent introduction of a securitisation of future debit and credit card receivables, which was widely accepted by organisations in the retail space. NDBIB has also instigated many interest rate swaps to some of the largest institutional investors in Sri Lanka.

NDBIB demonstrated foresight and commitment to capital market development with the launch of Sri Lanka’s only family of fixed income indices for government securities, co-branded with CRISIL of India. The family of indices comprises NDBIB-CRISIL 91 day T-bill index, NDBIB-CRISIL 364 day T-bill Index, NDBIB-CRISIL three year T-Bond Index and NDBIB-CRISIL five year T-bond index and has fulfilled a long-felt need in the Sri Lankan debt capital markets. The indices are now widely publicised in electronic and print media and used extensively by leading fund managers.

Structured teamwork drives standards
The team brings together a depth of experience and multi-disciplinary knowledge, combined with the shared drive to deliver financial solutions that are structurally superior. The disciplines of finance, accounting, economics, engineering, statistics, mathematics and marketing are well represented by the team members who offer a unique combination of both local and foreign expertise.

NDBIB staff members have been chosen through a rigorous selection process, and comprise of highly qualified young individuals with multi-disciplinary backgrounds. Most NDBIB staff possesses first-class degrees in various disciplines such as engineering, finance and accounting obtained mainly from local universities. In addition, some NDBIB staff members possess internationally recognised post-graduate qualifications and various professional qualifications such as FCMA (UK), ACMA (UK) and CFA.

The company provides training through in house and formal programmes, and encourage its staff members to pursue international post-graduate and professional qualifications to further enhance their knowledge base. Investment banking has become a passion and a lifestyle for the team at NDBIB, which takes pride in the quality and ingenuity of their work while upholding strict standards of ethical conduct.

The corporate culture at NDBIB is driven on the highest ethical standards with honesty and integrity as its hallmarks. It adheres to strict corporate, governance and ethical guidelines, including CFAs code of conduct – an internal framework for compliance and industry best practices.

The company has been at the forefront of the industry, having pioneered the introduction of many innovative structures and instruments for the local capital markets. NDBIB has set its sights on further strengthening its global reach by seeking strategic alliances with foreign distribution channels in order to meet the growing thirst for capital in Sri Lanka’s growing economy.