Logo of Phnom Penh Post newspaper Phnom Penh Post - Thai bank’s $140M offer to buy Cambodian MFI on hold

Thai bank’s $140M offer to buy Cambodian MFI on hold

A vendor walks past a Hattha Kaksekar branch in Phnom Penh in June 2014.
A vendor walks past a Hattha Kaksekar branch in Phnom Penh in June 2014. Heng Chivoan

Thai bank’s $140M offer to buy Cambodian MFI on hold

Eight months since announcing the biggest acquisition deal in the history of Cambodia’s financial sector, Thailand-based Bank of Ayudhya, also known as Krungsri Bank, has yet to receive approval for the landmark deal.

In a statement released in January, Bank of Ayudhya announced its intention to acquire Cambodian microfinance institution (MFI) Hattha Kaksekar Ltd (HKL) – a deal valued at upwards of $140 million. The acquisition, however, hinged on the approval of the National Bank of Cambodia (NBC).

Contacted this week, Chea Serey, general-director of the NBC, declined to comment on whether the central bank had approved the acquisition bid, and instead urged the Post to seek comment from HKL.

Hout Ieng Tong, president and CEO of HKL, said he could not confirm whether the deal would go through, as it had yet to be finalised.

“We still do not have concrete information on the agreement,” Ieng Tong said. “Until now, there is no official agreement.”

Representatives of Bank of Ayudhya did not respond to requests for interview.

However, Noriaki Goto, CEO of Bank of Ayudhya, said in the announcement in January that the share acquisition in HKL would enable the Thai bank to capture growth opportunities arising from the rapid development in Cambodia’s financial sector. He said Bank of Ayudhya would leverage its technical know-how to take advantage of HKL’s established position in the market.

Hattha Kaksekar is the fourth-largest Cambodian microfinance institution with total outstanding loans at $394 million as of end-June. The MFI’s deposits reached $296 million during the first half of the year.

HKL has announced plans to become a commercial bank, but has not disclosed the timeframe for its graduation.

While the central bank has reportedly been pushing Cambodia’s biggest MFIs to upgrade to commercial bank status through tie-ins with established foreign partners, HKL is not the only MFI struggling to get its approval.

Prasac, Cambodia’s largest MFI in terms of assets, recently saw the bid of its preferred bidder, South Korean lending giant Woori Bank, invalidated by the central bank for undisclosed reasons.

Woori was looking to acquire a 50 per cent stake in Prasac, a deal speculated to be worth about $500 million.

Stephen Higgins, managing partner of investment firm Mekong Strategic Partners, previously told the Post that the NBC appeared to be taking a sensible approach toward large MFIs looking to become commercial banks.

He said Cambodia’s MFI sector was uniquely attractive due to its “strong distribution networks, good governance, and hih return on equity”.

MOST VIEWED

  • NY sisters inspired by Khmer heritage

    Growing up in Brooklyn, New York, Cambodian-American sisters Edo and Eyen Chorm have always felt a deep affinity for their Cambodian heritage and roots. When the pair launched their own EdoEyen namesake jewellery brand in June, 2020, they leaned heavily into designs inspired by ancient Khmer

  • Omicron patients can stay home: PM

    Prime Minister Hun Sen has given the green light for anyone who contracts the SARS-CoV-2 Omicron mutation or any other variant to convalesce or receive treatment at home or in any other reasonable non-healthcare setting. The new decision supersedes a restriction on home care for

  • The effects of the USD interest rate hike on Cambodian economy

    Experts weigh in on the effect of a potential interest rate expansion by the US Federal Reserve on a highly dollarised Cambodia Anticipation of the US Federal Reserve’s interest rate hike in March is putting developing economies on edge, a recent blog post by

  • Cambodia’s first ever anime festival kicks off Jan 22 at capital’s F3 centre

    Phnom Penh's first ever Anime Festival will bring together fans, artists, shops and other local businesses with ties to the Japanese animation style for cosplay competitions, online games, pop-up shops and more on January 22, with Friends Futures Factory (F3) hosting. F3 is a project that

  • PM eyes Myanmar peace troika

    Prime Minister Hun Sen has suggested that ASEAN member states establish a tripartite committee or diplomatic troika consisting of representatives from Cambodia, Brunei and Indonesia that would be tasked with mediating a ceasefire in Myanmar. The premier also requested that Nippon Foundation chairman Yohei Sasakawa

  • Demining rat ‘hero’ Magawa dead at 8

    A landmine-hunting rat that was awarded a gold medal for heroism for clearing ordnance from the Cambodian countryside has died, his charity said on January 11. Magawa, a giant African pouched rat originally from Tanzania, helped clear mines from about 225,000sqm of land – the equivalent of 42