The International Finance Corporation (IFC), a member of the World Bank Group, is proposing to invest up to $150 million in the privately-placed, senior, unsecured USD-denominated bonds to be issued by Bank of Ayudhya Public Company, locally known as Krungsri, according to a disclosure.
The plan is to be an anchor investor in the $220-million “Women Entrepreneurs Bonds” of Thailand’s fifth-largest commercial bank, which is a strategic subsidiary of MUFG Bank, formerly Bank of Tokyo-Mitsubishi UFJ.
The other $70 million will come from German investment firm Deutsche Investitions-und Entwicklungsgesellschaft mbH (DEG), according to the IFC.
Proceeds from the bond issuance will be used to finance the expansion of the bank’s women-led small and medium enterprises loan portfolio, the IFC said in its investment proposal.
“The project will support the bank’s ongoing efforts to increase its lending portfolio to WSMEs, an important sector that drives economic growth and employment, and to promote resilient and sustainable growth and strengthen financial inclusion in Thailand,” the international lender said.
Additionally, IFC said it will also help the bank develop and launch the first differentiated financial and non-financial product offering in the market specifically designed for women entrepreneurs.
Listed on the Stock Exchange of Thailand, Krungsri is recognised as a domestic systematically important bank by the country’s central bank. It holds an 11.4 per cent market share of Thailand’s total banking assets as of December 2018. It has a market cap of $9.4 billion as of July 31, 2019.
IFC said the proposed investment in Krungsri will not be its first engagement with the Thai bank as it already has a multilevel partnership with the bank and its subsidiaries in East Asia and the Pacific region, notably Hattha Kaksekar Limited (HKL) in Cambodia.
The international lender said it also has an existing partnership with Krungsri’s major shareholder – MUFG Bank, Ltd., the largest commercial bank in Japan. Krungsri is 76.88 per cent owned by MUFG Bank.
In May last year, the IFC invested up to $20 million in local currency bonds issued by Cambodia-based HKL, a deposit-taking microfinance institution. HKL has one of Cambodia’s largest distribution networks. It has 168 branches across the country as of May 2018, employing over 3,100 people.