Bridge buys 34% stake in 1st Valley

MANILA, Philippines - Bridge Philippines Investments (Bridge) has acquired a 34-percent equity in 1st Valley Bank (1st Valley) for an undisclosed amount.

Bridge is an investment  holding company, specializing on supporting rural development in the Philippines through the financial services sector.

1st Valley is a thrift (development) bank based in Mindanao, with an asset base of P6.2 billion, a deposit base of P3.5 billion, a loan portfolio worth P5.1 billion, and a branch network of 27.

Bridge founder Paul Kocourek said that 1st Valley is their first investment but not the last. It was initiated and consummated last year, but cleared all regulatory requirements with the Bangko Sentral ng Pilipinas (BSP) just this year.

Kocourek admitted that Bridge was in talks with several independent thrift and rural banks to enter into similar arrangements.

Bridge has P1 billion in funding to enter into similar arrangements for as long as the prospective recipient is a healthy bank with a minimum asset base worth P500 million, strong aspirations for profitability and growth, and operating mainly in the rural Philippines.

“We believe in the development of country’s rural economies through the introduction of modern banking capabilities to improve the financial institutions in these areas,” Kocourek said.

By acquiring a significant minority stake in 1st Valley allows the development bank to diversify its investor base, improve its banking services and capabilities, and expand faster through acquisition or consolidation.

“A primary bank like 1st Valley can invest in the smaller banks to help them grow, while Bridge can continue to look for other banks,” he added.

Meanwhile, 1st Valley chairman and chief executive office Nicholas Lim said that the entry of Bridge provides secure, long-term investment thus helping the bank accelerate its growth.

“I need new and innovative ideas and international best practices to build the capabilities of the bank to ensure growth,” Lim said, adding that he is also in talks with Luzon-based rural banks for expansion options.

Bridge is establishing a network of innovative, dynamic, mission-driven independent thrift banks and rural banks, all located in rural Philippines. Bridge’s aim is to create jobs and opportunity by extending high-quality financial services to businesses, farmers and individuals in areas currently poorly served.  Bridge invests in already successful banks in a socially and environmentally sensitive manner by providing capital, capability building and central services.

Its major shareholders are Accion, a global nonprofit dedicated to financial inclusion; FMO, of the Netherlands and DEG of Germany, two of Europe’s biggest development finance institutions; and Bamboo Finance, a global private equity firm with expertise in microfinance and impact investing.

Last week, the International Finance Corp. (IFC) said it was investing P650 million in the Philippine Resources Savings Banking Corp. (PR Savings Bank), the fifth-largest independent thrift bank in the country. The IFC is the private investment arm of the World Bank.

The investment could strengthen PR Savings Bank’s balance sheet and expand lending in rural areas. Poverty in agricultural households is about three times higher than those in other sectors. Only one in four Filipino adults has an account in a bank or other financial institution.