An Amret MFI booth at a recent exhibition of financial services. A Taiwan-based firm has declared it will spend almost half a billion dollars to acquire the firm, one of the top ten financial institutions in the Kingdom. Amret Facebook
Taiwan-based Bank SinoPac has announced plans to acquire Amret Plc., one of Cambodia’s ten largest financial institutions.
SinoPac have reportedly agreed to pay approximately $543 million, or around 1.8 times the company’s book value.
Amret began as a small French-run NGO, offering microfinance loans in just three rural provinces in Cambodia, with a view to supporting local entrepreneurs through access to credit. In 2000, it became a private limited company, receiving its MFI license from the National Bank of Cambodia the following year.
As of December 2023, Amret had 150 operating branches in 24 provinces across Cambodia. It is the Kingdom’s largest microfinance deposit-taking institution by total assets.
At present, it is a full subsidiary of the Advans Group, a Luxembourg-based microfinance conglomerate.
Bank SinoPac will acquire 80 per cent equity in Amret in the first tranche for approximately $435 million, followed by two further tranches of 10 per cent each, at the end of the first year and second year, respectively.
“In the two years following this acquisition, The International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, and FMO, the Dutch Development Bank, will continue to be shareholders and partners in Amret, and Bank SinoPac looks forward to collaboration with them,” said a press statement from the company, following the May 4 announcement of the purchase.
SinoPac explained that its interest in the purchase stemmed from the bank’s goal of expanding its international presence, coupled with a desire to capitalise on the extraordinary growth projections of the Kingdom’s economy.
The IMF has forecast a compound annual growth rate of 6.3 per cent for Cambodia’s GDP from 2023 to 2028.
The Taiwan-based bank also noted Amret’s diverse range of products and services.
“Amret has a broad product suite covering traditional banking products, as well as an emerging digital capability. When combined with Bank SinoPac’s resources and management expertise, Amret will be fully equipped to provide more diversified and convenient financial services, enhancing customer value,” said the company.
“This acquisition will also enable Bank SinoPac to exert a more positive influence on sustainable finance. We hope to work together to achieve our corporate vision of ‘Together, a better life’,” it added.
A recent academic study by the National University of Singapore claimed that Cambodia has the world’s largest proportion of microfinance borrowers relative to its population, with average loan sizes well in excess of per capita annual income. There were 3.06 million active microloans in Cambodia in 2022, in a country with just 3.6 million households. The majority of the loans are secured by land-based collateral.
The Cambodian Microfinance Asociation (CMA) refuted claims that the sector was over extended.
“Microfinance has grown exponentially in Cambodia and is not as stressed as reported by the international media”, said a study by research firm M-CRIL, conducted in partnership with the CMA.
Hong Vanak, an economics researcher at the Royal Academy of Cambodia, believed that the acquisition was testament to the stability of Cambodia.
He explained that the Taiwan-based company would have monitored Amret’s performance for some time, and would continue to do so.
“It is clear that their assessment of Amret was overwhelmingly positive, otherwise they would not have agreed to such a high price. If their operations were poor, or there were only a small number of customers, they would not have been prepared to acquire the company,” he said.
“In addition, they have clearly identified future opportunities that they want to take advantage of,” he added.
He suggested that the primary factor that drove the purchase would be the effectiveness of Amret’s lending, including the successful repayment of the loans it issued.
“Strong indicators like these are the reason for the acquisition. In addition, SinoPac appears to have plans to expand the potential of Amret, perhaps through upgrading it to a commercial bank, or even further,” he said.
The completion of the acquisition remains subject to customary closing conditions, including relevant regulatory approvals.
Additional reporting by Niem Chheng
