MICROCAPITAL BRIEF: Eyeing International Expansion, Mexican Microfinance Bank Compartamos Banco Directs Shares to Holding Company

Mexican microfinance bank Compartamos Banco recently announced that it plans to transfer its shares into the newly created holding company Compartamos SAB through an exchange offer.

The exchange offer requires that Compartamos SAB obtain at least 85 percent of the bank’s shares, with the goal being that the holding company acquire 100 percent of the bank’s shares. If the holding company acquires at least 95 percent of Compartamos Banco’s shares, as expected, then the holding company will be listed and traded on the Mexican stock exchange and the bank will be delisted.

The deal does not involve cash proceeds, and bank management will be essentially unchanged. Compartamos Banco reports the purpose of the proposed transaction is to give it greater flexibility to expand into other markets both in Mexico and abroad [1].

By John Howard-Smith, Research Associate

About Compartamos Banco: Compartamos Banco is a microfinance bank based in Mexico that was founded in 1990. It offers groups and individuals business and home-improvement loans; voluntary savings; and insurance. The company made its initial public offering (IPO) in 2007 on the New York and Mexican stock exchanges in a transaction worth USD 467 million. As of 2009, Compartamos Banco had total assets equivalent to USD 708 million, a gross loan portfolio of USD 577 million and 1.5 million borrowers. For the quarter ending June 30, 2010 the MFI had a return on assets (ROA) of 19.65 percent and return on equity (ROE) of 42.17 percent.

[1] Wall Street Journal: “Mexico’s Compartamos To Switch Shares To Holding Company”, http://online.wsj.com/article/BT-CO-20101117-706609.html

MicroCapital’s Microfinance Universe profile: Compartamos Banco: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Com…

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