Union Bank to acquire The Finance & Guarantee Company
To pump in over Rs 1.1 billion:
Union Bank of Colombo PLC (UBC) together with an International
foreign investment Fund will acquire over 98 percent of the voting
shares of The Finance and Guarantee Company Ltd (TF&G), infusing new
capital to resurrect the business at a total investment in excess of Rs
1.1 billion, sources said.
Subsequent to creating history with its highest oversubscription for
an IPO, this latest acquisition places Union Bank in the limelight once
again with its focused diversification plans taking positive strides in
a short period of time.
Ajita de Zoysa |
Anil Amarasuriya |
International Investment Banker and Beacon Advisory Managing Director
Harish Parameswar, an emerging markets focused advisory and investment
firm based in Singapore applauds the acquisition as significant and
focused for Union Bank.
It is apparent that Union Bank will consolidate and build on the
recent acquisitions they have done.
Union Bank Chairman Ajita de Zoysa said that the Bank together with
ShoreCap II Limited (SCII) USA, will invest in excess of Rs 1.1 billion
to recapitalize TF&G.
He said the acquisition is part of Union Bank’s diversification and
expansion plan to increase focus and growth in the SME sector and it
earmarks yet another stepping stone to further penetrate the small
enterprises segment.
The decision was based on the respective stakeholders reaching
agreement and obtaining regulatory approval.
Subsequent to a comprehensive due diligence of TF&G, strategic
partner ShoreCap expressed willingness to invest in this venture
together with Union Bank.
Shorecap II is an international private equity company aiming to
provide socially responsible appreciation of capital through investments
that enhance the growth and capacity of financial institutions serving
micro and small enterprises in developing countries and transitional
economies.
Shorecap II has raised over $ 50 million in capital to support the
growth of development finance institutions in Asia and Africa and
between 2003 and 2008 invested in 15 small business banks and regulated
microfinance institutions.
Shareholders of SCII include the renowned CDC Group PLC, The European
Investment Bank, the Finnish Fund of Industrial Corporation, the
International Finance Corporation (IFC), the Norwegian Microfinance
Initiative and the Skoll Foundation.
De Zoysa also highlighted that with the international accreditation,
status and profile of SCII, who’s main shareholders include top global
financial institutions, it is evident this acquisition highlights
positive outlook for both the shareholders as well as all stakeholders
of TF&G. “Further we are able to leverage a unique value proposition to
drive TF&G to greater heights capitalizing on the extensive experience
and investment strategies of SCII in undeserved markets in the areas of
micro lending, deposit mobilization, capital re-structuring, new product
development, business planning, risk management and other funding
strategies,” he said. |