Union Bank of Colombo PLC (“UBC”), one of Sri Lanka's fastest growing banks, today announced that it has entered into an agreement with Culture Financial Holdings Ltd. (the “Investor”), an affiliate of TPG,a leading global private investment firm, which will be one of the largest foreign direct investments into Sri Lanka in recent years.
Under the agreement, TPG will invest up to approximately US$113 million in UBC through a combination of primary and secondary shares, representing up to 70% of the issued share capital, and warrants that, if exercised in full within their six-year term, would increase TPG’s interest in UBC to 75%. The Central Bank of Sri Lanka (“CBSL”) approved TPG’s investment in UBC on August 6, 2014.
Following a private placement of primary shares in UBC, the Investor will make an offer under the Company Take-overs and Mergers Code 1995 (as amended in 2003) to the other shareholders of UBC to acquire up to the number of shares that the Investor may acquire and hold under the approval granted by the CBSL. The issue of the shares under the private placement, the issue of the warrants and the general offer are subject to certain conditions, including, but not limited to, shareholder approval of the transaction and certain regulatory approvals.
Tim Dattels, Managing Partner and TPG’s Asia co-head, said,“We are pleased to partner with Union Bank. As a strategic and first-time investor in Sri Lanka, we are very encouraged by the country’s economic growth momentum and the Central Bank’s policy initiatives to enhance the country’s banking sector. We see great growth potential in Union Bank to emerge as one of the top five local commercial banks in the country.”
The transaction will strengthen the Tier 1 capital of UBC and enable UBC to meet the minimum capital requirement ofLKR 10 billion set by the Central Bank of Sri Lanka, which will come in to effect from January 1, 2016.
Alex Lovell, Chairman of Union Bank, said, “I am delighted with TPG’s investment in Union Bank. A foreign investment of this size and nature is unparalleled in the banking industry in Sri Lanka. TPG is one of the leading and most experienced private investment firms with an unrivalled investment track record in the financial services sector in Asia. Union Bank will be able to tap into TPG’s operational expertise and global resources to not only strengthen Union Bank’s balance sheet but also introduce new products and expand our network in order to offer better services to our customers.” TPG has received financial advice from CIMB Investment Bank and legal advice from Cleary Gottlieb Steen & Hamilton LLP as its international counseland F. J. & G. de Saram as its Sri Lanka law counsel. Nithya Partners provided legal advice to UBC.
