Japan’s Sumitomo Mitsui Financial Group (SMFG) has agreed to acquire a 49% stake in Vietnam-based FE Credit in a transaction that values the non-bank lender at $2.8 billion, according to an announcement.
The transaction marks the largest overseas investment into the Vietnamese financial sector, according to a government news portal on Wednesday.
FE Credit was established in 2015 as a spinoff from Hanoi-based commercial lender VPBank’s consumer finance division. VPBank said in a statement that the SMFG investment will enable FE Credit to tap the Japanese financial services giant’s industry know-how in financial service operations, as well as to have the capital for pursuing new investment opportunities in the market.
FE Credit claimed it has grabbed more than 50% market share in the local non-bank lending market, with 20,000 points of sales nationwide. The firm provides services including cash loans, loans for goods purchases, credit cards and insurance, among others.
By the end of last year, FE Credit had over 66 trillion dong in its loan book and generated more than 3.7 trillion dong in pre-tax profit.
Prior to FE Credit, SMFG, through Sumitomo Mitsui Banking Corporation, purchased a 15% strategic stake in Vietnam’s Eximbank for $225 million in 2007. In 2019, Sumitomo Life spent about $173 million to increase its shares in Bao Viet Insurance by 5.9% to hold more than 22% in the Vietnamese insurer.
Other Japanese banks have also become strategic shareholders of Vietnamese lenders, such as Mizuho Bank (owning 15% of Vietnam’s largest listed bank Vietcombank), The Bank of Tokyo-Mitsubishi UFJ (19.7% in Vietinbank), and Aozora Bank (15% in Orient Commercial Bank).