SBI financial group taking over Cambodia’s Ly Hour Microfinance

18, Oct. 2019

BANGKOK, NNA - Japanese financial group SBI Holdings Inc. will acquire a 70 percent stake in a Cambodian microfinance provider, Ly Hour Microfinance Institution PLC. (LHMFI), to reenter the banking business in the steadily growing Southeast Asian country.

LHMFI is expected to be granted a banking license shortly by the National Bank of Cambodia to expand its business from its current services targeted at retailers, SBI said in a statement on Wednesday.

SBI will initially acquire about 14.94 million shares in LHMFI from its existing shareholders by Nov. 25 and will rename the Cambodian firm – SBI Lyhour Bank PLC. SBI will additionally buy 37.56 million shares on Dec. 23 when the new bank’s capital is increased, the statement said. SBI’s stake will be 70 percent, and the price of acquisition will total $81.7 million. The National Bank of Cambodia approved the transaction on Oct. 9, the statement said.

LHMFI, a core company of Cambodia’s Ly Hour Group, was ranked eighth in Cambodia’s microfinance sector in terms of total assets as of December 2018. SBI aims to engage in “innovative banking” by combining the SBI group’s know-how on online financial and other FinTech services with Ly Hour Group’s track record in money exchange, real estate development, money transfer, general insurance, and other fields, the statement said.

In 2008, SBI founded Phnom Penh Commercial Bank in a joint venture with South Korea’s Hyundai Swiss Group led by Hyundai Swiss Saving Bank, which was a predecessor to SBI’s South Korean subsidiary SBI Saving Bank. But SBI withdrew from Cambodia’s banking business in 2016 by selling all its shares in the Phnom Penh bank as part of its business restructuring.

SBI has, however, engaged in the securities business in Cambodia since 2010 through its local unit, SBI Royal Securities PLC. “The Association of Southeast Asian Nations (ASEAN) is a growth market as a whole, and Cambodia, in particular, is expected to continue growing,” SBI spokesman Toshiki Aoyama told NNA. “We will leverage the know-how we have accumulated in Cambodia’s market.”

Apart from Cambodia, SBI has been in the banking business abroad in South Korea, Vietnam, and Russia through subsidiaries and affiliates.