South Korea’s KB takes over Cambodia’s biggest microlender

Sector hits record profits despite COVID and borrowers' overindebtedness.

South Korean banking giant KB Financial Group is increasing its bet on Cambodia’s microcredit industry, a fast-growing $13 billion sector facing increased scrutiny over concerns about overindebtedness and human rights violations.

New York-listed KB this month announced it had taken full ownership of Prasac Microfinance Institution, Cambodia’s largest microlender, completing an acquisition that began in April 2020 when it paid $603.4 million to buy 70% of the company from Sri Lanka’s LOLC Holdings.

As part of that deal, the companies included an options contract for the remaining 30% of shares that was triggered early, according to an August filing KB made to the U.S. Securities and Exchange Commission. KB Financial subsidiary Kookmin Bank acquired the 89 million shares for $322 million. One share will be held by Kookmin Bank’s Cambodian subsidiary.

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