Korean Bank to buy Cambodian microfinance arm of Sri Lanka’s LOLC
A Korean bank is to reportedly buy the Cambodian microfinance arm of Sri Lanka’s LOLC for a staggering U$ 603.4 million or Rs. 108.5 billion, subject to regulatory approval.
The local media has reported that the Korean firm is KB Kookmin Bank, which has said its Board has agreed to buy 70% stake in Cambodia’s PRASAC Microfinance Institution for US$ 603.4 million from LOLC.
PRASAC Microfinance is the No. 1 microfinance deposit-taking institution, taking up over 40% of market share in Cambodia with 177 branches.
A report in Korea Herald has stated that KB Kookmin will close the deal within three months, after due diligence and approval from financial authorities in Korea and Cambodia.
The deal is expected to allow KB Kookmin to consolidate its consumer banking network in the Southeast Asian nation. Operating six bank branches, KB Kookmin has reportedly earned preapproval in Cambodia for the acquisition in May. KB Kookmin has further stated it plans to buy the remaining 30% stake in the institution at least two years after the transaction.
PRASAC Microfinance has logged a KRW 91.5 billion (US$ 78.7 million) net profit in 2018, up 36.7% on-year, according to KB Financial Group’s regulatory filing.
Investors, apparently seeing new found value and demand, have reportedly pushed LOLC shares to third highest gainer, percentage wise.
OSL take:
The latest achievement recorded by Sri Lanka’s LOLC is yet another indication of the strength and growth of the country’s private sector. LOLC has expanded its businesses overseas due to its strong growth. Many local businesses are on the growth path due to the business conducive environment in the country. Also, the decision by the government of Sri Lanka to grant concessions and incentives to the business sector would further boost the country’s business sector. Foreign businesses/investors could therefore explore the possibility of forming partnerships/joint ventures with local companies to engage in expansion programme locally and internationally.
| Article Code : | VBS/AT/20200203/Z_6 |