Singapore’s MSME champion buys 15% stake in BDO rural bank

Leading Philippine lender BDO Unibank has struck a deal to sell 15 percent of its Davao-based subsidiary One Network Bank Inc. (ONB), the largest rural bank in the country, to a unit of Singapore-based private equity firm Archipelago Capital Partners Pte. Ltd.

In a press statement on Monday, BDO said it had entered into an agreement with Archipelago’s Osmanthus Investment Holdings Pte. Ltd., formalizing a working relationship between these parties. Since last year, Osmanthus has been helping ONB in developing a framework for its micro, small and medium enterprise (MSME) lending business, leading to the establishment of initial pilot test sites at end-2017.

“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 the statement.

Osmanthus’ parent firm, Archipelago Capital, invests in small- to mid-market companies in South East Asia. This private equity firm is managed by former McKinsey and banking professionals, led by its chief executive Jovasky Pang, who has extensive experience in microfinance in Asia.

“We believe in the vast potential of the MSME market in the Philippines and are committed to help ONB achieve a leading position in serving these customers. We are also excited by the prospect of having a partner like BDO who shares our vision of financial inclusion,” Pang said.

Pang was previously involved in growing BOC Fullerton Community Bank into the biggest village bank group in China. He also headed the SME and commercial business of Bank Danamon Indonesia.

For its part, BDO will retain a majority 85-percent ownership in ONB, allowing it to provide continued financial and operational synergies to the rural bank.

Its partnership with Osmanthus in ONB is expected to “accelerate ONB’s ongoing thrust into the MSME market and further extend coverage of the unbanked and underserved markets.”

As of end-2017, ONB remained as the country’s largest rural bank in terms of assets. It has over 120 branches and more than 220 automated teller machines, which allow access to BDO’s nationwide distribution network.

BDO acquired ONB from the Consunji family in 2015 for about P6.67 billion.