Despite the turbulent economic environment, NDB Capital Holdings has unlocked growth and new opportunities for its clients, offering a full gamut of investment banking services in Sri Lanka and expanding its reach overseas. Chief Executive Senaka Kakiriwaragodage in this interview with Echelon shares how the company has remained resilient despite troubled waters.
What factors are shaping the immediate future of financial markets in Sri Lanka, and how is NDB Capital Holdings unlocking opportunities for itself?
We’ve all been experiencing a challenging time, but we’ve also seen a lot of progress. Inflation is slowing, the rupee is appreciating, and the much-awaited IMF deal will help reduce our risk premium. Sri Lanka defaulted on its bonds, and the country was not an attractive investment destination. With the IMF programme in place, we know several multilateral and bilateral lenders are willing to be partners in Sri Lanka’s revival. Interest rates will also continue to decline, which will have a positive impact on equity markets too.
As an investment banking group, we raise equity and debt capital for corporations. We are the largest asset management company in the private sector, managing money for insurance funds, high net-worth individuals, and corporations. We also have multiple debt and equity mutual funds. What we can offer our clients will grow in these circumstances, and we will also benefit as a result.
We are also venturing into new markets. Recognizing the need for diversifying and expanding beyond our borders, we’ve strengthened our presence in Bangladesh, where we have operated for the past decade. We recently concluded a couple of large fundraising ventures for two large apparel companies in the country. Africa is another market we are tapping into, assisting a major Sri Lankan apparel company to raise 14 million USD a few weeks ago through our investor network. Several other transactions are already in the pipeline as well, which will create a positive impact on our group.
When so many factors are beyond your control, how can businesses like NDB Capital Holdings make a difference amidst an economic crisis?
We are in a turbulent market, where the interest rates have climbed from single digits to over 30% in a short period, unprecedented in Sri Lanka’s history. Fundraising is difficult in these circumstances, but we were able to raise some debt financing. The markets are drier than in previous years, very few IPOs happened, but we were able to add value to our buy and sell-side clients.
This includes several mergers and acquisitions that helped customers diversify their current businesses into new portfolios. We are invested in businesses, and managing our private equity portfolio too.
Having a hedged and diversified portfolio meant that although some of our domestic businesses had challenges, we had a couple of export-oriented enterprises that did well, allowing us to sell some of our private equity assets and return money to investors.
We’ve always followed a philosophy that puts the interests of our investors first, mitigating any risk and deliberately prioritizing safety over risking their hardearned capital. Our strategy helped us be very successful in 2021, and despite the challenges, be profitable in 2022.
How has NDB Capital Holdings imbued resilience into the company and inspired excellence among its people?
Being an intellectual capital-driven business, preserving our core asset, which is our staff was the biggest challenge we had to face. We have a substantial number of CFA-qualified employees, one of the highest within our industry, and we continue to invest in their training and development. Ensuring our staff ‘s physical and mental well-being, and assisting them in dealing with the pinch of the rising cost of living were also some of the measures we took to retain our talent.
With the highly qualified and capable team we’ve invested in, we encourage our senior staff to be more involved in the decision-making process and take on more responsibilities. We’re also enhancing our company culture by being more collaborative, listening more to our employees and making their experience more fulfilling.
How do you balance the immediate need to survive with investing resources for growth and unlocking new opportunities for your clients?
There’s a saying, ‘never let a good crisis go to waste,’ and we have dealt with the short-term challenges, but protecting your staff is vital and sometimes demands short-term sacrifices. We have reprioritized some investments and costs, addressed tough challenges at the expense of some profitability, and are dealing with the turbulence caused by the crisis. But we haven’t lost sight of the big-picture, what we want to achieve in the long run.
Aside from taking measures to train and retain our talent, we have made key hiring decisions to strengthen multiple aspects of our business. From research to risk management, compliance, client-facing and more, we’ve built our internal capabilities, preparing to hit the ground running, aggressively taking on the market once economic conditions turn favourable.
How important is innovation to the company, and what makes you a cut above the competition?
We were the first investment bank in the country to handle a foreign IPO, and we’ve been a pioneer that introduced several innovative products in the Sri Lankan capital market. Innovation is in our DNA, and we are already working with key stakeholders to bring new, innovative products to the market. These products will significantly improve the customer experience.
As the largest private sector fund manager in the country, it is quite evident that people have placed their trust in us. As one of the pioneering and most respected in the stock market, our stock broking arm is geared to provide investment advice and infrastructure to our diverse clientele, be it corporate or individual, local or foreign.
At NDB Capital Holdings, we provide solutions and expert advice to generate wealth. We have the skills, experience and proven track record to be at the forefront, helping our clients ride the oncoming wave of growth as we emerge from this crisis.