IFC and EBRD to Become Shareholders of Odea Bank as They Participate in TL 1.0 billion Capital Increase

27 Jun 2016
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Odea Bank, Turkey’s leading challenger bank, is being boosted by support from international financial institutions in a move that will take it to the next stage of growth.

IFC, a member of the World Bank Group, the IFC Financial Institutions Growth Fund (FIG Fund), a private equity fund managed by IFC Asset Management Company (AMC), and EBRD will become shareholders of Odea Bank, a subsidiary of Lebanon’s Bank Audi Group through a subscription to a TL 1.0 billion capital increase of the lender.

This capital increase will provide Odea Bank with additional financial flexibility which will allow it to expand its financing in the real sector in Turkey, fund large scale infrastructure projects and increase access to finance for medium and small sized companies (SMEs). Odea Bank is also planning to invest in new technologies to strengthen its digital banking network and reach one million unbanked people in Turkey.

As part of the TL 1.0 billion capital increase, the IFC and EBRD are investing the Turkish Lira equivalent of US$ 110 million and US$ 90 million, respectively. US$ 38.5 million of IFC financing is provided by the FIG Fund. The remaining balance will be covered by Middle Eastern investors and Bank Audi itself. Following the capital increase, Bank Audi Group will remain a majority shareholder of Odea Bank with a stake of more than 75 per cent.

Completion of the transaction is subject to regulatory approvals including approval by the BRSA and other customary closing conditions.

Odea Bank started its operations in late 2012 as a subsidiary of Bank Audi Group, the largest Lebanese lender and one of the leading international financial institutions with presence in the MENA region and also in Europe. Within only three and a half years of operations, Odea Bank has already established itself as one of the key players in the attractive Turkish banking sector reaching 8th position by customer deposits and 9th position by loans as of March 2016, excluding state-owned banks and based on BRSA unconsolidated financial statements of Turkish banks. Odea Bank operates 56 branches in 16 cities and employs over 1,500 staff as of June 2016.

Samir Hanna, Group Chief Executive Officer of Bank Audi Group and Chairman of Odea Bank, stated: “We welcome EBRD and IFC, as well as other investors as our new partners in Odea Bank. We are looking forward to a new phase of growth for Odea Bank in the highly promising Turkish banking market. This capital increase represents the largest capital increase in the Turkish banking sector over recent years and is a testimony to Bank Audi’s successful greenfield investment in Turkey. Odea Bank is a key pillar of Bank Audi’s future growth and we continue to be committed to its future development.”

Huseyin Ozkaya, General Manager and Board Member of Odea Bank, said: “It is vital and extremely encouraging that two reputable and prestigious institutions such as IFC and EBRD, alongside other investors, demonstrate their confidence in Odea Bank. With this capital increase, we will be able to expand our lending support to infrastructure investments and projects contributing to the development of the Turkish economy.
The equity investment will also allow us to support SMEs which account for 70 per cent of Turkey's employment, but receive less than 30 per cent of loans. We expect to make investments in our branch network, digital banking channels and technology in order to continue providing our corporate, commercial, SME and retail customers with the best quality service as the youngest top 10 bank in the competitive Turkish banking market.”

Both IFC and EBRD have previously provided Odea Bank with credit lines for SME finance and trade facilities. Manuel Reyes-Retana, IFC Regional Head of Financial Institutions Group in Europe, Middle East, and North Africa, said: “Giving smaller businesses access to capital allows them to unlock their potential and create much-needed jobs. SMEs form the backbone of the Turkish economy but often struggle to reach their potential. We are further deepening our partnership with Odea Bank to support the bank’s efforts in expanding banking services across Turkey with innovative and technological solutions.”

Nick Tesseyman, EBRD Managing Director for Financial Institutions, added: “The EBRD is proud to take its cooperation with Odea Bank to the next level and acquire a stake in this young and dynamic Turkish bank. As a shareholder the EBRD will assist Odea Bank in expanding lending where financing is needed most – to SMEs and women-led businesses, in particular outside the large metropolitan areas. The acquisition of stake in Odea Bank is the second joint investment we have made with IFC in the Turkish banking sector following the acquisition of a minority shareholding in Fibabanka.”

Bank Audi is advised by J.P. Morgan as its exclusive financial advisor and by Dechert as its legal counsel for English Law and by Bilgiç Attorney Partnership as its legal counsel for Turkish Law, while IFC and the EBRD are jointly advised by Clifford Chance as legal counsel for English Law and by Yegin Çiftçi Attorney Partnership as their legal counsel for Turkish Law.

About Bank Audi

Founded in 1830, Bank Audi (ISIN: LB0000010415) was incorporated in its present form in 1962 as a private joint stock company with limited liability (“société anonyme libanaise”). Since 1983, the shareholder base has expanded and is currently comprised of more than 1,500 holders of common shares and global depositary receipts (representing common shares). Bank Audi's common shares are listed on the Beirut Stock Exchange and its GDRs are listed on both the Beirut Stock Exchange and the London Stock Exchange.

Bank Audi is a universal bank with a presence in 12 countries. It operates principally in Lebanon, the MENA region and, since November 1, 2012, in Turkey, offering a full range of products and services that principally cover commercial and corporate banking, retail and individual banking and private banking, as well as ancillary activities such as investment banking and on-line brokerage.

Bank Audi has two principal subsidiaries in Lebanon, two subsidiaries in Europe, as well as an asset management company in Monaco, six subsidiaries in the MENA region outside Lebanon, and a subsidiary in Turkey. As at end-March 2016, Bank Audi and its consolidated subsidiaries had 6,989 employees, including 3,173 persons employed in Lebanon, 1,563 persons employed at Odea Bank in Turkey, and 1,335 persons employed at Bank Audi Egypt. For more information, please visit www.bankaudigroup.com or Bank Audi’s Investor Relations App (App Store & Google Play).

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About Odea Bank

Odea Bank, the majority-owned subsidiary of Bank Audi, is a joint stock company established on March 15, 2012. Since its establishment, Odea Bank became a mid-tier bank in less than two and a half years, now ranking 8th in the Turkish banking sector by customer deposits. Serving around 620,000 retail customers, Odea Bank operates a 56-branch network. For more information, please visit www.odeabank.com.tr

About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise and influence to create opportunity where it’s needed most. In FY15, our long-term investments in developing countries rose to nearly US$ 18 billion, helping the private sector play an essential role in the global effort to end extreme poverty and boost shared prosperity. For more information, please visit www.ifc.org

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About IFC Asset Management Company

IFC Asset Management Company LLC (AMC), a wholly-owned subsidiary of IFC, invests third party capital, enabling investors to benefit from IFC’s expertise in achieving strong equity returns, as well as positive development impact in the countries in which it invests. AMC has raised US$ 8.7 billion of capital across 11 investment funds. For more information, visit www.ifcamc.org

About EBRD

The EBRD is a multilateral bank committed to the development of market-oriented economies and the promotion of private and entrepreneurial initiative in more than 30 countries from Morocco to Mongolia and from Estonia to Egypt. The Bank is owned by 65 countries, the EU and the EIB. For more information, please follow the EBRD on the www.ebrd.com/home

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