responsability investments ag consolidation and transformation experience from the region november,...

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Consolidation and transformationExperience from the region

November, 2015Mirza Halilovic

responsAbility Investments AGwww.responsAbility.com

Today’s Agenda

General reasons for consolidation and transformation

Case studies:

MFI acquired by a Bank

Eki acquires Adria

Bank acquires a bank

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Consolidation and transformationGeneral

• Drivers:• New regulation

• Increased capital requirements• New legal forms

• Changed market environment• Increased competition• New product offering

• Outcome:• Merger• Acquisition• Transformation/Change of legal structure• Mix

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MFI acquired by a Bank

Same shareholders new structure

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MFI acquired by a BankSame shareholders new structure

• Rationale:• Better cost structure• Access to deposits• Stronger regulation

• Steps for MFI:• Step 1: Transfer of business• Step 2: Capital distribution to MFI’s current shareholder• Step 3: Bank acquires 100% of MFI’s shares emerging from Step 2

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MFI acquired by a BankSame shareholders new structure

Shareholders

Fun

d a

dviso

ry co

mpany

Funds Funds

MFI Bank

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MFI acquired by a BankSame shareholders new structure

Shareholders

Fund advisory company

Funds

MFI

Bank

Result:

MFI has been consolidated on Bank’s balance sheet

Focus on microfinance clients

Bank can provide the MFI with preferable funding

Use of bank’s infrastructure

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Eki acquires Adria

MFI transforms into company

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Eki acquires AdriaMFI transforms into company

• Rationale:• Better cost structure• Possibility to disburse larger loans• Possibility to diversify shareholder base

• Steps for EKI:• Step 1: MCF EKI (Foundation) made an offer to purchase 100% of Adria’s

(Company) shares and become its sole owner. • Step 2: Transfer Phase was to establish the operational integration between

MCF EKI and MCC EKI (name changed from Adria). • Step 3: Partner Phase and final phase to introduce VFI as a co-owner of MCC

EKI.

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Eki acquires AdriaMFI transforms into company

Company

Foundation

Result:

Shareholding structure

Possibility to attract additional shareholders

Possibility to disburse higher loan amounts

VFI

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Bank acquires another bank

Brothering product offering

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• Rationale:• Target is under capitalized• Acquirer wants to expand in to the new market segment

• Steps for MFI:• Step 1: Valuation of the target• Step 2: Negotiations and agreement between the shareholders• Step 3: Approval by the central bank

Bank acquires another bankBrothering product offering

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Bank acquires another bankBrothering product offering

Shareholders

Bank

Bank

Result:

Well capitalized bank fulfilling all regulatory requirements

New business area for the acquirers