SG’s Osmanthus completes acquisition of 15% in Philippines’ One Network Bank

Osmanthus Investment Holdings, a unit of Singapore-based private equity firm Archipelago Capital Partners, has completed its acquisition of a 15-per cent stake in One Network Bank Inc (ONB), the rural banking arm of the Philippines’ largest lender BDO Unibank.

BDO Unibank confirmed the completion of the deal in a disclosure to the Philippine Stock Exchange. The deal was first announced in October but financial details were not disclosed.

“We inform the exchange that on May 16, 2019, BDO Unibank completed its transaction with Osmanthus for the acquisition of a 15-per cent equity stake in ONB,” the lender said in its disclosure.

ONB became a BDO subsidiary in 2015 when the latter bought a controlling stake from the Consunji family for P6.67 billion ($127 million). This allowed BDO to broaden its market base.

ONB provides deposit-taking services, salary loans and MSME loans in areas considered unbanked or underserved by banks. As of 31 December 2017, ONB remained the country’s largest rural bank in terms of assets. It has over 120 branches and more than 220 ATMs with access to BDO’s nationwide distribution network.

BDO said, the transaction formalises the working relationship between ONB and Osmanthus. The Singapore firm has been collaborating with ONB since 2017 in developing the framework for its micro-SME (MSME) lending business, leading to the establishment of the initial pilot test sites.

“The partnership with Osmanthus will further strengthen ONB’s strategic foothold in the microfinance business, and contribute to the government’s efforts at improving financial inclusion,” BDO said in its October disclosure.

Osmanthus is unit of Singapore-based PE firm Archipelago Capital Partners Pte Ltd, a fund that invests in small to mid-market companies in Southeast Asia. It is managed by former McKinsey and banking professionals, led by CEO Jovasky Pang.

BDO, ranked the largest bank in the Philippines in terms of total assets, loans, deposits, and trust funds under management as of June 30, 2018, sees net profit this year hitting a new high of P38.5 billion ($731 million), driven by a continued double-digit expansion in loan book, improved margins, and steady fee-based income.

In January 2017, BDO completed the largest equity capital raising in the Philippines at P60 billion ($1.1 billion). The offer saw strong participation from the BDO’s domestic and international investors and was oversubscribed.