LOLC announces sale of PRASAC stake for US$603mn

LOLC Holdings PLC yesterday finally came up with its much-awaited announcement on its US$603 million deal with a Korean lender to divest its Cambodian microfinance business.

In a stock filing LOLC Holdings said, along with other minority shareholder of PRASAC Microfinance Institution Limited of Cambodia, it entered into a share purchase agreement and a shareholder agreement with Kookmin Bank, for the sale of PRASAC’s entire shareholding, subject to receiving final approval from the National Bank of Cambodia (NBC) and the Financial Service Commission of Republic of South Korea.

Kookmin is the largest commercial bank in South Korea and PRASAC is the largest microfinance firm in Cambodia.

The filing said LOLC International Private Limited of Singapore, a subsidiary of LOLC Holdings, which holds 70 percent of PRASAC will receive US$603 million for the sale of its stake in two tranches.

“Proceeds of US$422 million will be received upon receipt of approval from the NBC and the balance US$181 million in 2022,” the filing said.

PRASAC was LOLC group’s first foreign investment in 2007.

The group also operates microfinance companies in Myanmar, Philippines, Indonesia, Pakistan, Zambia and Nigeria, including the LOLC Cambodia PLC, the fourth largest microfinance firm in Cambodia.

PRASAC generated a profit of Rs.13.7 billion for the 2018 financial year with an ROE and ROA of 28.4 percent and 3.64 percent, respectively.

About 85 percent of LOLC group’s pre-tax profit was derived from overseas investments in 2018 financial year.

With the sales proceeds, LOLC group is likely to settle some of its high-cost debts and expand its operations to several other promising microfinance markets such as Kenya.

LOLC Holdings share closed at Rs.169, down Rs.1.30 or 0.76 percent, yesterday.