Nepali billionaire Binod Chaudhary-owned firm to buy 70% stake in Union Bank from TPG

The major shareholder of Union Bank of Colombo PLC has entered into a share sale and purchase agreement with a private equity fund owned by Nepal’s CG Corp Global controlled by billionaire Binod Chaudhary to sell its entire stake in the bank.

A stock market filing by Union Bank yesterday said the sole shareholder of Culture Financial Holdings Pte Ltd., TPG Asia VI SF Pte Ltd. has entered into a share sale and purchase agreement for the sale of the entirety of the shares held by TPG Asia VI SF Ptd. Ltd. in Culture Financial Holdings Ltd. to CG Capital Partner Global Pte. Ltd.
Culture Financial Holdings owns 70.84 percent of Union Bank.

The filing said the completion of the transaction is subject to several conditions, including regulatory approvals. 

The filing didn’t mention at what price the transaction would be carried out. The Union Bank share closed at Rs.8.50 yesterday, one rupee or 13.33 percent up from the previous close. The net asset value per share of the bank stood at Rs.17.32 as at September 30, 2022. 

CG Capital Partners is a Singapore-based joint venture private equity company between Chaudhary’s CG Corp Global and NE Group that invests in pre-seed and seed-stage companies demonstrating a minimum viable product, grown user base and revenue in the immediate future, the company’s official website said.

Back in 2014, TPG Asia paid US$ 113 million to acquire its 70.84 percent stake in Union Bank. At the time, the rupee/dollar exchange rate was around Rs.130. Union Bank reported earnings of 10 cents a share or Rs.105.7 million for the most recent quarter ended September 30, 2022 (3Q22) compared to 17 cents a share or Rs.182.2 million in the same period last year, which translated to 42 percent decline. 

The bank’s gross non-performing advances ratio rose sharply to 7.29 percent, from 4.46 percent at the start of the year, reflecting the asset quality pressure faced by the bank from the weakening borrower profiles.

The bank provided Rs.709.7 million as provisions against possible loans and other losses in the quarter under review, up 274 percent from a year ago.