Sri Lankan Firm Buys Majority Ownership of Largest MFI

A Sri Lankan conglomerate has acquired majority ownership of Prasac, Cambodia’s largest microfinance institution (MFI), for $186 million, according to an announcement on Friday.

Lanka Orix Leasing Company (LOLC), which previously held 22 percent of the company, purchased another 48 percent from three previous owners: Belgian Investment Company for Developing Countries, Vietnamese firm Dragon Capital Group and Netherlands Development Finance Company.

LOLC now holds a majority of the MFI’s share, at 70 percent, with Hong Kong’s Bank of East Asia holding 21 percent and Prasac Staff Company holding 9 percent. LOLC also has partial ownership of Thaneakea Phum, another local MFI.

Prasac’s assets are valued at about $1.3 billion, and the company plans to transform into a licensed commercial bank in the future, according to LOLC’s press release.

The move from MFI to commercial bank has become increasingly attractive to investors looking to expand loan portfolios into growing consumer sectors such as cars and housing.

The purchase was announced days after the Central Bank capped the annual interest rate MFIs can charge at 18 percent. Prasac was also among three MFIs forced to change its logo last month as part of government efforts to ensure that confused consumers do not think that MFIs are controlled by the state.

Representatives from Prasac and LOLC could not be reached.

(Additional reporting by Hang Sokunthea)

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