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.

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.

source - www.dailynews.lk