BANGKOK -- Taiwan's CTBC Bank has agreed to acquire 35.6% of LH Financial Group, the parent of Thailand's smallest commercial lender, Land and Houses Bank, for 16.6 billion baht ($465 million).
LH Financial Group, which controls 99.99% of LH bank, will offer 7.5 billion new ordinary shares through a private placement to CTBC Bank at 2.2 baht per share. The transaction is due for completion by the end of the third quarter.
CTBC Bank is the banking unit of CTBC Financial Holding, Taiwan's third largest financial services company. As the prospective largest individual shareholder in LH Financial Group, it will take over from Land and Houses, the country's largest residential developer, whose holding will be diluted. However, the combined shareholdings of LH and affiliate Quality Houses, another developer with a major stake in LH Financial Group, will be 35.6% after the dilution.
CTBC Bank has expanded overseas in recent years. It acquired Tokyo Star, a medium-size Japanese bank, in 2014. Last year, it signed a mutual shareholding deal with banking units of CITIC Group, a conglomerate in China. CTBC Bank now has 106 outlets in 14 countries and regions.
LH Bank started out as the banking arm of Land and Houses, primarily focusing on housing loans, but its portfolio has diversified into loans to companies of all sizes. The bank had been looking for potential partners in recent years to expand its banking operations. The Thai conglomerate Charoen Pokphand Group run by billionaire Dhanin Chearavanont has shown interest in investing.
Stocks of LH Financial Group dropped 7.43% on Wednesday to 1.87 baht as investors divested in anticipation of dilution.