Archipelago completes investment in Philippines bank

According to a regulatory filing Archipelago acquired a 15% stake in ONB for an undisclosed amount, with BDO retaining an 85% holding. The transaction formalizes a partnership between ONB and Archipelago that began in 2017, focused on improving the bank’s lending to micro, small, and medium-sized enterprises (MSMEs).

ONB was formed in 2004 through the consolidation of three rural banks. The bank is based in Davao and operates more than 120 branches and 220 ATMs, mostly in rural areas of Mindanao island. BDO acquired the bank in 2015 with the goal of expanding its business into microfinance and serving regions that are underserved by traditional banks.

In 2016 TPG Growth, the middle market investment platform of TPG Capital, agreed to acquire a 40% stake in ONB for an undisclosed amount. However, that transaction was later canceled due to delays in committing the necessary funds on the part of TPG.

According to its most recent annual report, ONB recorded net interest income of PHP1.4 billion ($26.5 million) for the year ended December 2017, up from PHP1.2 billion the year before. Income from other sources, primarily service charges, fees, and commissions, fell from PHP1.15 billion to PHP1.02 billion over the same period, while the company went from a PHP60.3 million net profit to a net loss of PHP285 billion.

Archipelago was formed in 2016 and is currently seeking $150 million for its debut fund. The GP targets small to mid-market businesses in Southeast Asia, particularly in the consumer, healthcare, financial services, and niche industrial sectors. Previous transactions include the acquisition of Indonesian chemicals manufacturer Timuraya Tunggal last year.

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• Topics
• Southeast Asia
• Financials
• Expansion
• Philippines
• Financial Services
• Growth capital
• Archipelago Capital Partners