In January 2016 Norfund signed an agreement together with other shareholders to sell all shares of Cambodia’s fourth-largest microfinance institution, Hattha Kaksekar Limited (HKL), to the top tier bank in Thailand with a clear leadership position in consumer banking Bank of Ayudhya. This purchase might be the biggest deal in Cambodia’s financial sector history.
The reason for this sale is that HKL now aspires to become a fully licensed bank for small and medium-sized enterprises (SMEs) in addition to continuing their microfinance services. To achieve this, HKL needs a strategic partner and shareholder, such as Bank of Ayudhya, with experience and leadership position in consumer banking and microfinance. Bank of Ayudhya PCL (Krungsri) is a member of Mitsubishi UFJ Financial Group (MUFG), one of the world’s largest financial groups Enhanced by the expertise of Bank of Ayudhya, HKL will be further developed to become a much larger microfinance service provider with an even more robust operating platform, assisting customers to succeed in their businesses with suitable financial products and services.
The development of HKL is a real success-story from a development investor’s perspective. In addition to the company’s expansive growth and financial success, HKL’s microfinance services have resulted in crucial economic and social contributions to one of the poorest countries in the Mekong region. More than 316.000 clients throughout 25 provinces of Cambodia are today receiving loans or other financial services from HKL. This is fundamental for their ability to initiate and develop small private businesses and find their way out of poverty. 70% of HKL’s clients are female entrepreneurs and almost 27% of its loans are in agriculture.
Hattha Kaksekar, which means “A Helping Hand for Farmers”, was founded in 1994 as an Oxfam food security project, providing loans to rural people in Cambodia. At that time there was no functioning banking structure in this war-thorn country. Over the years HKL grew, transformed itself to a limited liability company and became a major microfinance institution in Cambodia with over 153 offices. In less than a decade, HKL’s loan portfolio increased over 20 folds to USD 370 million.
Loan, equity and professional expertise from Norfund and other investors were essential for this positive development of HKL.