Colombo, 25 August 2026 – LOLC Finance PLC (Company Registration No. PB244PQ), a leading diversified financial services provider in Sri Lanka, today released a comprehensive circular to its shareholders detailing its decision to repurchase a significant number of its Ordinary Voting Shares. This strategic move, initially announced on 23rd July 2026, aims to enhance capital management and optimize shareholder value, reaffirming the company’s robust financial health.
The repurchase is being conducted in accordance with Article 16(b) of the Company’s Articles of Association, read in conjunction with Section 64 of the Companies Act No. 7 of 2007 and CSE Listing Rule 7.10.1. LOLC Finance PLC has also communicated its intentions to the Central Bank of Sri Lanka (CBSL), ensuring adherence to all regulatory and statutory requirements.
Key Details of the Share Repurchase Offer
The Board of Directors has set the repurchase price at Rs 7.00 per share. This price was determined after careful consideration of two primary factors: the company’s capital adequacy both before and after the repurchase, and a valuation methodology most relevant to a finance company. The closing market price on 15th July 2026, when the repurchase was first recommended, was Rs 5.00.
LOLC Finance PLC boasts a strong capital position, well above regulatory minimums. As at 30th June 2026, the total capital ratio stood at 22.21% (521 basis points above the 17% minimum) and the Tier 1 (core capital) ratio at 22.43% (1,243 basis points above the 10% minimum). Following the repurchase, the total capital ratio is projected to be 19.03% and the core capital ratio 19.25%, both comfortably exceeding regulatory requirements.
The repurchase price of Rs. 7.00 per share falls within the fair value range assessed by various valuation approaches, including Comparable Market Multiples (principally Price-to-Book Multiple), Income Approach using Residual Income, Volume Weighted Average Price, and Adjusted Net Asset Value. The Company’s Auditors, Messrs. Deloitte Partners, Chartered Accountants, have confirmed the terms of the offer and the consideration to be paid for the shares represent a fair value.
- Maximum Number of Shares to be Repurchased: Up to 2,299,122,556 Ordinary Voting Shares.
- Total Value Employed: Up to Rs. 16,093,857,892.00. This will be financed from the Company’s retained earnings as at 31st March 2026 (Rs. 93,072,462,320.00) and existing excess liquidity.
- Offer Period: The offer to repurchase shares will commence on 9th September 2026 and close at 4.00 p.m. on 21st September 2026.
- Payment Date: Payments to accepting shareholders will be made on or before 5th October 2026.
The primary reason for the repurchase is to achieve efficient capital management and optimize shareholder value, while maintaining a prudent capital adequacy ratio crucial for unconstrained business operations. The shares purchased by the Company will be cancelled immediately upon acquisition, in terms of Section 63(3) of the Companies Act No. 7 of 2007.
Basis of Offer and Shareholder Guidance
The offer is extended to shareholders on the basis of Seven (7) shares out of every Ninety (90) shares held by shareholders as at the Record Date on 1st September 2026. Fractional entitlements will be pooled and offered to shareholders who opt to sell additional shares.
Shareholders are not obligated to accept the repurchase offer and may choose to accept it fully or partially. Those wishing to offer additional shares beyond their entitlement may do so by completing Form B (and Form C for CDS holders in certain cases). Such additional offers will be purchased on a pro rata basis, subject to availability from shareholders who partly or fully do not accept the initial offer.
Procedure for Acceptance:
- Shares not deposited with CDS: Shareholders must complete Sections A, B & C of Form A – Form of Acceptance and return it along with the original share certificate to the Corporate Solutions Unit, Central Depository Systems (Pvt) Limited (CDS), by 4.00 p.m. on 21st September 2026.
- Shares deposited with CDS: Shareholders must complete Sections A, B, C & E of Form A and forward it through their stockbroker or custodian bank to reach the CDS by 4.00 p.m. on 21st September 2026. Photocopies of Form A are permitted for multiple CDS accounts.
- Offer to Sell Additional Shares: Shareholders must complete Form B (and Form C where applicable for CDS holdings) and submit it through the relevant channel by the closing date.
Once a shareholder submits an acceptance or an offer for additional shares, it cannot be withdrawn under any circumstances. Furthermore, trading restrictions will apply to the shares for which the repurchase offer has been accepted until the conclusion of the repurchase process.
Settlement for Resident Shareholders will be made via Banker’s draft or direct fund transfer (RTGS/CEFT/SLIPS) to the bank account details provided. Non-Resident Shareholders will receive payment into their Inward Investment Account (IIA) or Capital Transaction Rupee Account (CTRA).
Shareholders are strongly advised to seek independent professional advice regarding any tax implications arising from the repurchase. Detailed instructions for handling lost share certificates, Power of Attorney, and deceased shareholders’ acceptances are also provided in the circular.
This share repurchase program underscores LOLC Finance PLC’s commitment to prudent financial management and its dedication to delivering value to its shareholders through efficient capital deployment. Investors are encouraged to review the full circular for complete details and guidance.
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