Japanese online financial services group SBI Holdings Inc last week announced that it will acquire a 70 per cent stake in a Cambodia-based Ly Hour Microfinance Institution Plc (LHMFI) in a bid to re-enter the Kingdom’s banking sector, Japan-based Kyodo News Group’s economic news site NNA Asia reported.
Citing a statement from SBI Holdings released on Wednesday, NNA Asia reported that the National Bank of Cambodia (NBC) approved the acquisition on October 9.
LHMFI is expected to be granted a banking licence shortly by the NBC to expand its business from its current services targeted at retailers, said the statement.
SBI Holdings will initially acquire about 14.94 million shares in LHMFI from its existing shareholders by November 25 and purchase an additional 37.56 million shares on December 23, it said.
The acquisition will carry an $81.7 million price tag and will transform the microfinance institution (MFI) into a commercial bank, which will operate under the new name – SBI Lyhour Bank Plc.
LHMFI chairman Ly Hour declined to disclose further details on Monday, saying “the deal is still under process”.
Cambodia Microfinance Association chairman Kea Borann told The Post on Monday that the deal is a sign of foreign investors’ increased confidence in the Kingdom’s economic growth.
“I think our country’s MFI sector is showing strong growth. The sector is one of the backbones helping to boost economic growth. I think that [if LHMFI] becomes a bank, it can provide more services than as an MFI,” he said.
With competition heating up in the Kingdom’s crowded financial market, Borann believes that mergers will become more prominent in the industry.
“I believe that [more mergers] will take place in the future. The big ones [companies] will buy out the smaller ones or the small ones will merge,” he said.
In 2008, SBI Holdings founded Phnom Penh Commercial Bank (PPCBank) in a joint venture with South Korea’s Hyundai Swiss Financial Group Inc – led by Hyundai Swiss Savings Bank Inc – which was a predecessor to SBI Holding’s South Korean subsidiary SBI Savings Bank Inc.
SBI Holdings withdrew from Cambodia’s banking business in 2016 and sold all its shares in PPCBank as part of its business restructuring.
However, SBI Holdings has engaged in the securities business in Cambodia since 2010 through its local unit, SBI Royal Securities Plc.
The deal is the latest in a series of Japanese investments in Cambodia – particularly in the banking sector.
Last year, J Trust Co Ltd, a Japanese holding company listed on the Tokyo Stock Exchange, purchased a 55 per cent stake in Cambodian joint venture ANZ Royal Bank (Cambodia) Ltd, which was renamed to J Trust Royal Bank Ltd.
In 2012, Maruhan Japan Bank Plc acquired a 95 per cent share in Sathapana Microfinance Institution Plc, which is now Sathapana Bank Plc.
SBI Holdings aims to engage in “innovative banking” by combining the group’s know-how on online financial and other financial technology services with Ly Hour Group’s track record in money exchange, real estate development, money transfer, general insurance and other fields, it said.
“[Asean] is a growing market as a whole, and Cambodia, in particular, is expected to continue growing. We will leverage the know-how we have accumulated in Cambodia’s market,” SBI Holdings spokesman Toshiki Aoyama told NNA Asia.
Cambodia Post Bank Plc CEO Toch Chaochek welcomed the move, saying it is a good sign for the Kingdom’s financial sector.
“I believe LHMFI is strong enough on its own, Seeking an experienced partner to become a bank is a top-notch move,” he said.