Search

Search form

Logo of Phnom Penh Post newspaper Phnom Penh Post - Microlender in monster deal

Microlender in monster deal

Traffic passes in front of Prasac Microfinance’s headquarters yesterday in Phnom Penh.
Traffic passes in front of Prasac Microfinance’s headquarters yesterday in Phnom Penh. Pha Lina

Microlender in monster deal

Hong Kong financial giant The Bank of East Asia and Sri Lanka’s LOLC announced on Friday that they have jointly acquired a majority stake in Prasac Microfinance, Cambodia’s largest microfinance institution (MFI) by assets, in what could be the largest acquisition of a Cambodian lender to date.

According to a joint company release, The Bank of East Asia (BEA) and LOLC acquired a controlling share of Prasac by purchasing minority stakes held by Dragon Capital Group Ltd, Belgian Investment Company for Developing Countries SA (BIO) and the Netherlands Development Finance Company (FMO).

The acquisition raises LOLC’s existing holding from 22 percent to 70 percent, with BEA holding 21 percent. Prasac retains the remaining 9 percent stake.

The deal was valued at $186 million by Sri Lankan media. Prasac and its shareholders could not be reached yesterday for confirmation, nor was the National Bank of Cambodia (NBC) available to confirm whether it had approved the acquisition.

Prasac is Cambodia’s largest deposit-taking MFI with an asset portfolio of $1.3 billion and over $660 million in deposits, according to the joint statement, which added that the deal would help pave the MFI’s path toward becoming a licensed commercial bank.

Sim Senacheert, CEO of Prasac, was quoted in the release as saying that BEA was a strategic investor that would “further contribute to sustainable economic development and financial inclusion in Cambodia”.

David Li, chairman and chief executive of BEA, said the deal marked the financial group’s first foothold in Cambodia and would help it expand its reach to the ASEAN Economic Community (AEC).

“Through Prasac, our bank will further strengthen its presence in Southeast Asia. This strategic investment will enable us to better capitalise on the opportunities arising from China’s ‘Belt and Road Initiatives’,” he was quoted as saying.

This is not the first time Prasac has worked toward securing a strategic investor, a move widely seen as the central bank’s requirements for commercial bank licence eligibility.

In August 2016, the NBC scuttled a deal between Prasac and South Korean financial giant Woori Bank for a 50 percent stake, claiming that the Korean lender was not one of the preferred bidder’s acknowledged by the independent regulatory body.

Cambodian MFIs have attracted the interest of international investors, with several large mergers and acquisitions announced in recent years. In January 2016, Thailand-based Bank of Ayudhya reached an agreement to acquire the local MFI Hattha Kaksekar – a deal that was valued at upwards of $140 million.

BEA’s stake in Prasac would mark the entry of Hong Kong’s third-largest bank into the Cambodian market. The financial group reported $98.7 billion in consolidated assets as of the end of last year.

RECOMMENDED STORIES

  • Breaking: PM says prominent human rights NGO ‘must close’

    Prime Minister Hun Sen has instructed the Interior Ministry to investigate the Cambodian Center for Human Rights (CCHR) and potentially close it “because they follow foreigners”, appearing to link the rights group to the opposition Cambodia National Rescue Party's purported “revolution”. The CNRP - the

  • Rainsy and Sokha ‘would already be dead’: PM

    Prime Minister Hun Sen on Sunday appeared to suggest he would have assassinated opposition leaders Sam Rainsy and Kem Sokha had he known they were promising to “organise a new government” in the aftermath of the disputed 2013 national elections. In a clip from his speech

  • Massive ceremony at Angkor Wat will show ‘Cambodia not in anarchy’: PM

    Government officials, thousands of monks and Prime Minister Hun Sen himself will hold a massive prayer ceremony at Angkor Wat in early December to highlight the Kingdom’s continuing “peace, independence and political stability”, a spectacle observers said was designed to disguise the deterioration of

  • PM tells workers CNRP is to blame for any sanctions

    In a speech to workers yesterday, Prime Minister Hun Sen pinned the blame for any damage inflicted on Cambodia’s garment industry by potential economic sanctions squarely on the opposition party. “You must remember clearly that if the purchase orders are reduced, it is all