IBF Financial Holdings Co (國票金控) is to acquire all EnTie Commercial Bank (安泰銀行) shares through a cash-and-share swap to secure a bigger space in the banking market, IBF said yesterday.
Under the deal, which was approved by IBF’s board of directors earlier yesterday, each EnTie shareholder is to receive NT$9.46673 in cash and 0.493344 class A preferred shares in IBF for each EnTie share, it said.
The class A shares could be converted into IBF common shares after one year, it said.
The offer is valued at NT$17.21 per share, a premium of 1.2 percent over EnTie’s closing share price on Wednesday and 6.4 percent above its average price for the past 20 trading sessions, IBF said.
However, the offer is 1 percent lower than EnTie’s net worth of NT$17.44 per share as of June 30, it said.
The total value of the deal would be NT$33.7 billion (US$1.2 billion), IBF said.
“We think that it is a reasonable buyout price,” IBF executive vice president Andrew Chiu (邱銘恩) told a news conference in Taipei.
His company would raise fresh capital of NT$18.5 billion and issue new preferred shares at NT$15.7 each to finance the deal, if it is approved by its shareholders at a special meeting on Dec. 2 and separately by the Financial Supervisory Commission (FSC), Chiu said.
Longreach Group, which has about a 50 percent stake in EnTie, would have about a 9 percent stake in IBF after the share swap, but the private equity firm would not intervene in IBF’s management and would sell the shares within a year, IBF said.
After the deal, EnTie shareholders would hold a combined 18 percent stake in IBF, it said.
The commission does not bar financial conglomerates from having more than one banking unit, but as operating a bank requires significant capital, it would examine whether IBF Financial, which operates Web-only Rakuten International Commercial Bank Co (樂天國際銀行), has a financial profile solid enough to support twin operations, Banking Bureau Chief Secretary Phil Tong (童政彰) said yesterday.
“There has been a consensus in IBF Financial’s board of directors for long time that we need to buy a bank or a life insurer, as IBF, which has mainly focused on bills finance, lacks a long-term platform managing money flow,” IBF chairman Wea Chi-lin (魏啟林) said.
Even though IBF has launched a virtual bank, regulations prohibit it from corporate banking and it would take a while before regulators could amend those rules, Wea said.
The acquisition of EnTie is expected to create synergy, he added.
The company would redirect EnTie’s operations to focus on wealth management and corporate lending, especially loans to small and medium-sized enterprises, and it would transfer its bill finance clients to the new unit, Wea said, adding that the Internet bank would focus on young consumers and inclusive finance.
The IBF-EnTie deal would be the latest in which a foreign private equity firm sells a local bank, after SAC Private Capital Group in 2014 sold Cosmos Bank Taiwan (萬泰銀行) to China Development Financial Holding Corp (中華開發金控) and Carlyle Group LP in 2016 sold Ta Chong Bank (大眾銀行) to Yuanta Financial Holding Co (元大金控), FSC data showed.
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