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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » I am going to the beach.. You guys get back to work! - Alex Lovell

I am going to the beach.. You guys get back to work! - Alex Lovell

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Business Basil


Manager - Equity Analytics
Manager - Equity Analytics

Jaffna's St.Patrick College Old Boy Alexis Indrajit Lovell is now titled as the worst Deal Maker in the country who bought the worst deal to kill retailer market sentiment in Sri Lanka after post war market boom; bringing large benefits to others where as investment general pubic will have to bear the loss after share dilutes.

Accordingly when Union Bank's share was rising as high as Rs.24 per share Alex Lovell who is also the Chairman of the Bank through his deal making skills bought US based TPG Capital owned TPG Asia VI's Cayman Island registered investment arm Culture Financial Holdings Ltd to buy a 75% stake of Union Bank just at Rs.15.30 per share whilst Sri Lanka's Regulator just halted the share trading of the bank few minutes before the announcement came when share was trading exorbitantly high as Rs.23 and Rs.24 per share levels.

Further Culture Holdings will thus receive 742.156,249 shares at Rs.15.30 via private placement and through special approval from Central Bank of Sri Lanka to keep the investment of 75% for next fifteen years and cut it back to 15% by after some time.Further Culture Holdings also receive 30 cents per valued Warrants of Union Bank amounting to 218,281,250 Warrants that has to be exercised and converted to normal shares of bank at Rs.16 per share after six years time from 2014 August.

The controversial question remains whilst public holding of the bank is 63.79% to date (as at date of announcement on 14th August 2014) now the many investing Genera Public will lose money who bought the share at Rs.23-24 levels recent times and even people who bought the share at Rs.42 to Rs.44 levels on the first day when Union Bank started trading on Colombo Stock Exchange (CSE) for next 15 years.

It is because since though 68% is bought via private placement at Rs.15 though TPG lead Cultutre Financial Holdings offer a Mandatory Offer to exceed their stake to 75% of Union Bank they will not buy the share at Rs.18-Rs.24 levels since they have got many shares at Rs.15 that would last for next 15 years and by this way TPG Capital and Alex Lovell consortium will shed Union Bank shares to Sri Lankan General Public at Rs.23-25 levels for next fifteen years at a profit.

Some say Alex Lovell is also a major shareholder of Culture Financial Holdings along with TPG Asia VI and he benefits largely from the deal.

Top Trader


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

BB what is the source of Alex shareholding in CFH, can anybody with the legal background are their any possibilities of getting the name of the shareholders, if Alex has it through directly or indirectly, then it will clearly fall under the related party transactions

SHARK aka TAH

SHARK aka TAH
Expert
Expert

CORRECTED-UPDATE 1-TPG strikes biggest Sri Lanka buyout deal with $113 mln Union Bank buy

(Corrects structure of stake in pargraph 2, title in paragraph 4, date in paragraph 7)

By Shihar Aneez and Stephen Aldred

Aug 14 (Reuters) - TPG Capital Management LP has agreed to buy a majority stake in Sri Lanka's Union Bank of Colombo PLC (UBC) for $113 million in the country's biggest buyout deal.

TPG, via its affiliate Culture Financial Holdings Ltd, will take a stake of up to 75 percent in Union Bank through a combination of primary and secondary shares and warrants, the bank and the fund said on Thursday.

Sri Lanka's government is keen to develop the banking sector to support growth in an economy which is emerging from the trauma of a protracted civil war. The economy is expected to growth 7.8 percent this year, faster than last year's 7.2 percent growth.

Puneet Bhatia, a partner and TPG's India country head, told Reuters the private equity fund hopes to turn Union Bank into one of Sri Lanka's top five banks.

Union Bank is the eighth-largest of Sri Lanka's 12 listed banks and has a market capitalisation of around $67 million, according to Thomson Reuters data.

"Our experience with banks in Asia shows that a small, community-based lender can create a very strong financial institution," said Bhatia.

The buyout will boost Union Bank's Tier 1 capital, a measure of its financial strength, to enable it to meet the central bank's minimum capital requirement of 10 billion rupees ($76.8 million) before a Jan. 1, 2016 deadline.

The returns made from relatively small investments in banks in emerging markets can be substantial for private equity funds.

Last year, TPG sold part of its stake in Indonesia's Bank Tabungan Pensiunan Nasional Tbk PT to Japan's Sumitomo Mitsui Banking Corp, putting it on course to earn more than 10 times its initial investment made in 2008.

http://www.reuters.com/article/2014/08/14/sri-lanka-unionbank-tpg-capital-update-idUSL4N0QI3M320140814

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