MicroCapital interviewed Prodem CEO and Founder, Edurado Bazoberry recently at the WWB-Goldman conference on capital markets. Many people in the microfinance world were shocked that Mr. Bazoberry, one of microfinance’s most innovative pioneers, would “sell out” given the potential damage to a fledging industry he did so much to build.

Mr. Bazoberry justified the move as a rational reaction to the threatening posture of the newly elected Morales administration of the Bolivian government. The Morales government wants its public banks to serve the Bolivian poor and is happy to use legislative levers to manipulate the market as political tensions in Bolivia continue to grow. Prodem’s bread and butter business is rural lending and according to Mr. Bazoberry his business had been overtly targeted by the government. He believes that within eight months his business will be killed, so he decided to sell.

And while he had many suitors, as Prodem is one of the top micro-banks in the world, no buyers offered a price over book value, given the situation. Except, of course, the Venezuelan government. Although Mr. Bazoberry will not disclose the price of Prodem, we believe it to be about 3.5 times book value, which is a plum price even under ideal circumstances.

So, he took the money, much of which goes to Prodem employees who have been compensated with stock for many years. Although Mr. Bazoberry remains quite defensive about his decision, he is now a rich man and as ambitious as ever. He says his next plan is to use the proceeds to create a regional bank, which may open as soon as next year. Many of Prodem’s employees have decided to invest in this new venture with their proceeds from the sale. It appears the Venezuelan government did not bother–or just did not care–to secure a non-compete agreement.