Lanka Rating Upgrades Debt Instrument Rating of First Capital Holdings - LKR 2Bn Senior Unsecured Redeemable Debentures

Lanka Rating takes both Consolidated and Standalone view on the market positioning and performance of the First Capital Holdings PLC (FCH or the Company). The assigned rating incorporates the Company's ability to uphold its relative position as a Holding Company of First Capital/Janashakthi Group within the financial service industry. FCH has sustained strong performance in terms of profitability and capital formation over last 2 years. FCH’s net profit stood at LKR~4.3bn in 9MFY25 compared to LKR~8.3bn in 9MFY24. During FY24, FCH recorded strong financial results and witnessed positive outcomes. The Group's profitability remained strong at LKR~4.5bn in 9MFY25 (9MFY24: LKR~9.4bn). On a consolidated basis, the Company reflects a total asset and equity base of LKR~94.2bn and LKR~12.5bn, respectively, in 9MFY25. Although in the past, FCT, the Company’s prominent subsidiary in Primary Dealer activities, had been a major contributor towards FCH's improved business profile, recently it is evident that this is changing. At present the performance of other subsidiaries and investments are also increasingly contributing to the overall performance of FCH. The Dealing Securities and Corporate Advisory division reported PAT of LKR~1.9bn and this was predominantly driven by the Equity portfolio of the Company. The Wealth management division and Stockbroking division has also shown profits in 9MFY25. FCH has a diverse funding base with a mix of debentures, commercial papers and bank borrowings, which bodes well for the Company. FCH has significantly reduced its exposure to related-party receivables as of March-25. The Company maintains moderate leveraging of ~54.1% in 9MFY25 (FY24: ~59.7%) and a strong capital base.
The rating is dependent on the Company's ability to maintain its strong market position in the changing macroeconomic environment. Meanwhile, sound financial discipline, including continued capital retention, managed related-party exposure and debt repayment ability, is imperative. Additionally, the financial health of the parent, JL, and continued strong performance of subsidiaries would be critical rating factors.

About the Entity
First Capital Holdings PLC (FCH or the Company) is a public limited liability company incorporated in 23 March 1992 under the provisions of the Companies Act No. 17 of 1982 and re-registered under the Companies Act No. 07 of 2007. FCH’s equity stake of 83.01% is held by Janashakthi Limited (formerly known as Janashakthi PLC) as of September 2023. The Company’s principal activity comprises investment and management of subsidiaries (7). FCH’s integrated business platform comprises four specialized areas - Capital Markets Advisory, Wealth Management, Fixed Income and Equities.

About the Instrument
FCH currently has LKR~2bn, listed, rated, senior, unsecured, redeemable debentures each worth LKR 100/-. The tenure of the debentures is 5 years. The coupon paid is a fixed rate of 10% p.a. and floating rate of weekly AWPLR + 2.00% p.a. payable annually with a ceiling of 12% and a floor of 9%. The Debenture was opened for subscription on 1-Feb'21 and alloted on 8-Feb'21. The objective of the issue is to provide the necessary long-term stable funding to facilitate future expansion of business activities (i.e., balance sheet growth) of the Company with favorable funding options.