SBI makes first foray into Cambodia
Japanese Financial Group SBI Holdings has entered Cambodia through the creation of a private equity fund in partnership with Royal Group, the country’s largest conglomerate. It is SBI’s second overseas joint venture vehicle this year, following the formation of a $100 million fund in Abu Dhabi with state-owned Invest AD, which will target Turkish firms.
The Cambodian fund will receive initial capital of $50 million, with each party contributing half, and seek investments through Royal Group's local networks. Kenji Hirai, director of overseas business management at SBI, tells AVCJ that the fund expects to raise further capital from global institutional investors once is has established an investment track record.
Phnom Penh-based Royal Group, which was formed in 1990, is involved in wide range of sectors, including finance, media, telecom, hospitality and real estate.
"Cambodia has fast-growing domestic industries and a large, young workforce, particularly in the manufacturing sector. It is being eyed by many global players," Hirai says.
In addition, SBI's securities business in Cambodia - the SBI Phnom Penh Securities and Cambodian Capital Securities - will merge with a securities unit of the Royal Group by November 2011, under the umbrella brand SBI Royal Securities. The merger was approved in October of last year and it means SBI is the first Japanese company to become a fully licensed "lead manager" in Cambodia. The agreement states that SBI will own 71% of the securities business, with Royal Group holding the remaining 29%.
In the past five years, SBI has looked for opportunities to widen its footprint overseas, with a particular focus on emerging countries such as Hungary, Russia, Vietnam and Brunei. SBI's has devoted most attention to Greater China, where is has launched a $100 million private equity fund with Hong Kong-based Kingston Financial Group (as well as taking a small stake in Kingston via SBI Securities) and announced the formation of venture capital funds with Taiwan's Shin Kong Group and Hong Kong's Nan Fung Group, as well as Fudan University in Shanghai.
"Financial businesses in emerging countries are growing rapidly, so SBI will continuously strengthen its interests in areas such as banking, securities, insurance and investment," Hirai says.
Over the next three years, SBI plans to set up funds in countries such as Brazil, India and Indonesia as well as in Africa. Its aim is to develop each overseas subsidiary as local company capable of penetrating the global market.
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