TPG Capital shares its investment experience in Sri Lanka

Wednesday, 10 September 2014 00:00 -     - {{hitsCtrl.values.hits}}

  • Role of regulators, facilitation by Govt. of over $ 117 m investment in Union Bank hailed
TPG Capital, which has around $ 60 billion funds under management, shared its recent experience of investing in Sri Lanka. TPG Capital Group last month announced a $ 117 million deal to buy an over 70% stake in stages in Union Bank of Colombo Plc. TPG Capital Senor Advisor Michael O’Hanlon shares some of the key highlights as well as experience in investing in Sri Lanka: I’m here to talk about our investment in Union Bank of Colombo, which will settle later this month, it is a $ 117 m investment and we will own about 70% of the bank. Union Bank is a very small bank; it has less than $ 300 million total footings and the infrastructure isn’t really fully developed. It is in a market that is a really high growth market. What do we like, besides the high GDP growth, it is that the lending markings are very strong, the banking system makes money and the loan market is significantly underpenetrated (loans as a percentage of GDP is only 31%), mortgage loans are a very small percentage across the banking system, general SME loans are only 20% of SMEs’ sources of debt. Therefore, across multiple areas of lending, there is the ability to grow the balance sheet profitably. We have gone into many other markets, but what we liked about Sri Lanka was that the regulators were both commercial and accessible. The places where we have had the best results have been where we are in partnership with the regulators – both the banking regulators and securities regulators. This way we can work with them to bring the banks and other financial institutions forward. Here we found that there were no roadblocks and in fact the Government was a facilitator, so we like Sri Lanka as a place to do business and in conjunction with the regulators, we look forward to helping the bank move forward.