Incofin Investment Management, a Belgium-based impact investor, recently announced that its Rural Impulse Fund (RIF) II is among several entities selling a total of 80.01 percent of the shares of Cambodian microfinance institution Angkor Mikroheranhvatho Kampuchea (AMK) to Taiwan-based Shanghai Commercial and Savings Bank (SCSB). The other sellers are Agora Microfinance NV, a Dutch holding company; the Cambodia-Laos Development Fund of the Norwegian government’s Norfund; and the French government’s Societe de Promotion et de Participation pour La Coopération Economique (Proparco). While the sizes of the former shareholdings have not been released, each of the investors is exiting AMK completely, except for Agora Microfinance NV. AMK Staff Association, which was not involved in the sale, together with Agora Microfinance NV now hold 19.99 percent of AMK’s shares, in undisclosed portions.
SCSB President John Chen said, “We are impressed with AMK’s social mission and are committed to not only continue but further strengthen it as the institution’s incoming principal shareholder…. SCSB’s roots in serving the individual who would not traditionally have had access to banking services are firmly entrenched in the principles that guide SCSB today. SCSB sees a lot of similarity between when SCSB started as a Bank and where AMK is now.”
Incofin’s East Asia Regional Director, Dina Pons, who served as board member of AMK for six years, said, “As a responsible impact investor, we considered our mission complete and thus chose to exit to a financially solid investor with the aim to maintain the original social mission and client target…. In our screening of interested investors, SCSB clearly emerged as the one which understood grassroots rural entrepreneurship and its contribution to local economies the best, owing to its own history.”
AMK CEO Kea Borann said, “AMK’s expansion into non-credit business in the recent past, especially its rapidly expanding deposit base, requires an ever-increasing focus on risk and liquidity management. We therefore believe that the addition of a strong banking institution as our main shareholder is an excellent fit for the next step in AMK’s development.”
While the size of the transaction has not been disclosed, an official of one of the parties to the transaction, who agreed to be quoted on the condition of anonymity, did comment on a report calling SCSB too “aggressive” to help address concerns that “the poor in Cambodia are in serious and rising over-indebtedness.” The official described this report’s pegging of the sale price at USD 150 million as “highly exaggerated and nowhere close to the real price.”
AMK was founded in 1999 by Concern Worldwide, a charitable organization based in Ireland. The microbank became an independent company in 2003, was licensed as a microfinance institution (MFI) in 2004 and received a deposit-taking license in 2010. As of December 2017, it reported total assets of USD 283 million, a gross loan portfolio of USD 208 million, customer deposits of USD 118 million and 575,000 customers served via 150 branches.
SCSB was founded in the city of Shanghai, China, in 1915. Through 127 branches in nine countries, it provides commercial, corporate and retail banking services in addition to wealth management and insurance services. As of December 2017, SCSB and its subsidiaries reported total assets of TWD 1.7 trillion (USD 58 billion), outstanding loans of TWD 927 billion (USD 31 billion) and customer deposits of TWD 1.4 trillion (USD 47 billion).
A unit of the Agora Group, Agora Microfinance NV is a holding company that creates and supports MFIs in frontier markets with the mission of “maximising the social returns,” while realizing a “fair and attractive financial return.” Agora Microfinance NV, which has investments in Cambodia, India and Zambia, works as an “operator-investor,” placing equity in MFIs and then engaging them in the areas of strategy and execution. The other members of the Agora Group are Moringaway, a lender to MFIs, and Agora Microfinance Partners, its advisory arm. As of December 2016, the group reported total assets of USD 224 million, outstanding loans of USD 153 million and annual return on equity of 6.4 percent. As of the same month, Agora Group’s MFI holdings served 376,000 loan clients and 271,000 depositors.
Incofin is a for-profit firm with a portfolio spanning 316 companies providing “opportunities for vulnerable or less privileged people to improve their lives” in 45 countries. This portfolio, valued at USD 1 billion as of 2018, comprises the following funds: agRIF, the BIO account, Fairtrade Access Fund, Fonds pour l’inclusion financière en République Démocratique Congo (FPM), Incofin CVSO, Invest in Visions, RIF II, VDK Loan Portfolio and Volksvermogen.
Sources and Additional Resources
Incofin press release
http://www.incofin.com/incofin-proparco-and-cldf-sell-their-stake-in-amk-microfinance-leading-deposit-taking-microfinance-institution-in-cambodia/
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