A Cayman Islands registered company, Cultural Financial Holdings Ltd. has entered into an agreement to buy nearly 70% of Union Bank of Colombo PLC shares for nearly Rs. 15 billion.
Cultural Financial Holdings has agreed to buy 742.1 million ordinary voting shares of Union Bank of Colombo PLC at Rs. 15.30 per share as a Private Placement.
The largest US based investment company TPG and its most recent Asia-focused investment fund TPG Asia VI, L.P and its related entities indirectly hold a 100% equity interest in Cultural Financial Holdings Ltd. through TPG Asia VI SF Pte. Ltd.
Union Bank of Colombo PLC has also resolved to issue to Cultural Financial Holdings Ltd. simultaneously with the issue of the Private Placement of shares, 218.2 warrants at Cents 30 each conferring Cultural Financial Holdings Ltd with the right to subscribe to ONE new ordinary voting share per warrant within a period of SIX years from the issue of such warrants at the exercising price of Rs. 16 per share.
The Union Bank of Colombo PLC board of directors obtained approval from the Central Bank of Sri Lanka for Cultural Financial Holdings Ltd. to acquire 75% of shares from Union Bank of Colombo PLC and reduce it to 15% in 15 years thereafter.
This investment will be made on a staggered basis with Cultural Financial Holdings Ltd initially acquiring a 68% stake in Union Bank of Colombo PLC by subscribing for new ordinary voting shares and subsequently increasing the stake up to 70% through a mandatory general offer and finally up to 75% if required by exercising the warrants.
At the date of announcement the stated capital of Union Bank of Colombo PLC is Rs. 4.9 billion and its public holding percentage is 63.79%.
The proceeds will be utilized by Union Bank of Colombo PLC to enhance its Tier 1 capital and also enable it to meet the minimum capital requirements imposed by the Central Bank of Sri Lanka which will come into effect from 01 January 2016.
The Colombo Stock Exchange temporarily suspended the trading of Union Bank of Colombo PLC shares this morning in expectation of this announcement.
