Samic Microfinance, an institution that was worth $17.3 million last year, has sold its entire operations to South Korea-based NongHyup Bank for an undisclosed amount, a Samic executive confirmed on Thursday.
The Kingdom’s microfinance institution (MFI) will be renamed NongHup Finance Cambodia following acquisition approvals from the National Bank of Cambodia (NBC) and the Cambodian Ministry of Commerce (MoC).
Samic CEO King Kap Kalyan said on Thursday that the decision to sell the firm was due to competition within the Kingdom’s financial industry. He said operators needed stronger capital and lower overheads in order to thrive.
“The [previous] shareholders have limited ability to expand in the market, so we needed to walk out and allow new owners with strong financial abilities to come in and strengthen competitiveness in the current market,” he said.
All staff and management from Samic will remain at the company, he said, noting that there will be a new CEO, but the handover was being undertaken optimistically by both institutions.
“The company will continue to grow and expand sustainably, and the staff will continue to work and develop their skills with the new shareholders,” he said.
Representatives from the NBC could not be reached on Thursday to confirm the deal.
An annual report at the end of last year said Samic’s total assets were $17.3 million. Total borrowings stood at $10.5 billion then, as the company was on a downward spiral with falling net profits over the previous three years.
After clocking in $614,689 in profit for 2015, it fell to $554,861 and $439,381 over the next two years.
Upon successfully acquiring Samic, NongHyup plans to begin extending mortgage loans and loans for small and medium enterprises in the country, as well as add more microfinance products.
They also plan to add more branches in urban areas such as Sihanoukville, Siem Reap and the capital.
Consolidations and acquisitions within the financial sector have ramped up in the Kingdom over the last three years.
In June, South Korean-based Woori Bank bought out local MFI VisionFund and renamed it WB Finance.
In March last year, Hong Kong-based Bank of East Asia and Sri Lanka’s LOLC jointly acquired a majority stake in Prasac Microfinance, Cambodia’s largest microfinance institution by total assets.
Thailand’s Bank of Ayudhya also recently acquired local microlender Hattha Kaksekar Ltd (HKL).
Cambodia Microfinance Association executive director Yun Sovanna said on Thursday that shuffling ownership within the industry could support growth, outreach and diversification.
However, he urged new owners to take up the social mission of MFIs by continuing to support low-income clients and vulnerable groups with protection measures.
“Key stakeholders need to work together to ensure our social mission is kept and will continue to be the focus.
“A change of investors should not mean a change of business model or mission, at least not in the near term. We shall keep a close eye on this development,” he said.