Union Bank acquires The Finance & Guarantee

Partners with ShoreCap to infuse Rs 1.1 billion:

Union Bank of Colombo PLC (UBC) together with an International foreign investment Fund ShoreCap II Limited of USA has acquired over 98 percent of the voting shares of The Finance and Guarantee Company Ltd (TF&G). This will infuse new capital to resurrect one of Sri Lanka’s oldest finance companies at a total investment in excess of Rs 1.1 bn.

Previously Union Bank acquired National Asset Management Limited (NAMAL) Sri Lanka’s pioneering Asset Management Company in February 2011.

Ajitha de Zoysa

This acquisition further highlights Union Bank’s focused diversification plans taking positive strides in a short period of time.

Union Bank Chairman Ajitha de Zoysa stated that the Bank together with ShoreCap invested in excess of Rs 1.1 billion to recapitalize TF&G.

Significant investments were made by both parties with Union Bank investing Rs 600 million and its strategic partner ShoreCap investing Rs 550 million to acquire one of Sri Lanka’s oldest finance companies established in 1961. De Zoysa further stated that the acquisition is part of Union Bank’s diversification and expansion plan to increase focus and growth in the Small and Medium Enterprises (SME) sector and it earmarks yet another stepping stone to further penetrate the Small enterprises segment.

The newly revived TF&G with the backing of Union Bank which is of firm financial stability will restore public confidence. As a pioneering Finance company with a heritage of over 50 years, TF&G catered to a broad spectrum of clientele and created substantial goodwill which adds value to the acquisition.

The company deposit base is over three billion rupees with over 50 percent of the company’s deposits been converted to non voting shares with the consent of depositors, he revealed.

Union Bank is poised for quantum leap growth through profit as well as branding. Hence its subsidiary companies are being realigned in line with both macro and micro developments.

This will make TF&G stand out on its own, while associating the core values of Union Bank hence inculcating strategic changes required to build the desired Brand image that will enable TF&G to forge ahead as a stronger brand creating a distinctive positioning in the industry.

In July this year Union Bank received Central Bank approval to positively pursue the acquisition and highlighted that the Union Bank Balance Sheet had a positive outcome when stress tested for this acquisition.

De Zoysa further stated that the association of Union Bank with 16 years expertise in the banking industry, ShoreCap’s comprehensive expertise in investments in emerging economies and TF&G, with over 50 years history and expertise jointly leverages diverse strengths for the formation of a stronger and powerful entity.

He further highlighted that such private sector intervention with the support of the government contributes positively to the development and stability of the Finance Industry and the Economy of Sri Lanka.

A reconstitution of the Board of Directors was effected with a diverse combination of local and international professionals and businessmen including Alexis Lovell, Davis Golding, Yiu Joe Toh, W A J Warnakulasuriya, Upali Wijesekera and Malinda Samaratunge.