- OFID supports MSMEs in Sri Lanka
OFID supports MSMEs in Sri Lanka
December 22, 2015, Vienna, Austria. OFID is participating in the first tranche of a US$153m senior secured syndicated loan for Commercial Leasing & Finance (CLC) in Sri Lanka, arranged by Dutch development bank FMO. CLC will use the financing for on-lending to local micro-, small- and medium-sized enterprises (MSMEs), which are considered an important backbone and catalyzer for economic growth for Sri Lanka.
FMO provided a US$20m loan and acted as Mandated Lead Arranger and Facility. In addition to OFID’s US$20m contribution, participants include Finnfund, Proparco and BIO, ResponsAbility, Blue Orchard, Symbiotics and Oikocredit, among others.
Although this is OFID’s first transaction with CLC directly, OFID has an existing partnership with other members of the LOLC Group (Lanka Orix Leasing Company Plc), which holds 99 percent shareholding of CLC. LOLC is active in areas such as agriculture and plantations, renewable energy, leisure, construction, manufacturing and trading and financial services.
OFID extended two loans to LOLC that enabled the company to expand its leasing operations and provide longer-term financing for SMEs. OFID has also provided funding to LOLC Micro Credit Ltd.
CLC has a strong focus on the MSME sector with nearly 55,000 active borrowers. Over 60 percent of CLC’s loans and lease assets are micro loans. Long-term funding in Sri Lanka is very scarce and local banks have limitations due to group limits in supporting the funding requirements of institutions such as CLC.
OFID’s participation in the syndicated transaction will be used to support the company’s growth plans and to replace short-term local debt, and thereby strengthening its funding base with longer tenors.
Link to FMO's press release