Lanka Rating Maintains


Instrument Rating of

LRA Logo

LOLC Holdings PLC - LKR 10Bn Listed Rated Senior Unsecured Redeemable Debenture, Assigns "Positive Outlook"

20-Aug-25

01

Applicable Criteria

Methodology | Debt Instrument Rating | Aug-24

02

Related Research

Sector Study | Holding Company | May-25


03

Analyst

Gayani Randima Ariyawansa | gayani@lra.com.lk
+94 114 500099 | www.lra.com.lk

PRESS
RELEASE

DISCLAIMER

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to LRA

LRA Logo
Rating Type Debt Instrument
Current
(20-Aug-25) 		Previous
(29-Jul-24)
Action Maintain Maintain
Rating A A
Outlook Positive Stable
Rating Watch - Yes


The rating reflects LOLC Holding's (“the Holding Company”) robust position as the ultimate Holding Company of the LOLC Group (the Group) - one of the largest conglomerates in Sri Lanka (Asset Base of LKR~2.0tn: FY25). The Holding Company has gradually transitioned from being primarily focused on financial services to managing a diversified investment portfolio across various sectors, both locally and internationally. Despite this diversification, financial services continue to be the core contributor in terms of assets and profitability. The Group has expanded its geographical footprint and now operates in 25 countries, with a strong presence in South and Southeast Asia, Central Asia, Africa, and the MENA region. Overall, the Group’s operations are divided into financial and non-financial segments, with the financial services segment accounting for ~76.67% of the Profit Before Tax of the LOLC Group. The Holding Company’s net profit increased to LKR~49.8bn in FY25 from LKR~29.9bn in FY24. The Group’s net profit has also improved to LKR~41.0bn in FY25 as compared to LKR~21.8bn in FY24. The financial services segment continued to perform well in FY25, driven by the strong results of LOLC Cambodia and LOLC Finance in Sri Lanka. Other financial entities, particularly those involved in microfinance, also showed improved performance, although operations in some countries are yet to achieve profitability. The leisure sector returned to profits with the rebound in tourism in Sri Lanka and other operating regions. The trading and manufacturing segment also improved. Despite its robust footing and diversified business streams, the Holding Company’s financial matrix remains constrained by low cash profits and high debt dependence. The capital structure reflects an elevated debt-to-equity mix of ~51.3% in FY25 (FY24: ~51%; FY23: ~42.7%) as the absolute quantum of debt has grown significantly. Moreover, the Holding Company’s EBITDA remains stressed, as most profit represents non-cash income from group companies, resulting in weak interest and debt cover. Conversely, the Holding Company’s liquid investments and unutilized funding lines remain relatively low. The Holding Company is undertaking various strategies, including divestment of certain non-core investments and re-strategizing of fund upstreaming through dividends and share repurchases to consolidate and strengthen its financial position.
The rating is dependent on the Holding Company's aptness to improve its financial matrix, particularly in terms of its capital structure, debt mix, and debt repayment capacity. Alleviating pressure on short-term debt reliance is imperative. The rating also factors in the operational cash generation capacity of the Holding Company. Meanwhile, materialization of the envisaged plans, including share buybacks and divestments, remains critical.
LRA Logo

About the Entity

LOLC Holdings PLC ("the Holding Company") is a public quoted company incorporated in 1980. LOLC Holdings became the Holding Company of the Group in 2011. The largest shareholding of the Holding Company lies with Mr. Ishara Nanayakkara, with an ownership of around 80%. Mr. Nanayakkara is one of Sri Lanka’s leading entrepreneurs coming from a strong business background.


About the Instrument

LOLC Holdings PLC holds LKR~7.5bn Listed, Rated, Senior, Unsecured, Redeemable debentures worth LKR 100/-, with the option to issue up to LKR~10bn in case of oversubscription. The tenure of the debentures spans a period of 10 years. Type A Debenture includes coupon payments annually at a fixed rate of ~10.25% p.a. (AER – 10.25%) and Type B Debenture includes quarterly coupon payments at a fixed rate of ~9.85% p.a. (AER – 10.22%), and Type C Debenture includes annual coupon payments at a fixed rate of ~12.00% p.a. (AER – 12.00%). The objective of the issue is to refinance the short-term bank facilities of the Holding Company.

Lanka Rating Agency Limited

No. 145,
Kynsey Road, Colombo 00800, Sri Lanka

Tel: +94 11 450 0099

Web: http://lra.com.lk

E-mail: info@lra.com.lk