WASHINGTON, D.C., January 26, 1999 --- In the first major privatization in Nicaragua, a controlling interest in Banco Nicaraguense de Industria y Comercio, S. A. (BANIC) has been sold to private investors through a capitalization transaction. IFC acted as principal advisor to BANIC and the Government of Nicaragua.
A block of 36,000 new shares, representing a 50.7 percent equity stake in Nicaragua's most prominent bank, was offered to five qualified bidders from Nicaragua and abroad. Inversiones Iberoamericanas, S. A., a consortium financially and managerially backed by Hamilton Bank, N.A. of the United States, won the bid with the highest offer of $11,052,000, a premium of 63 percent over the minimum price.
Vice-Minister of Finance Alfonso Llanes said the completion of the BANIC capitalization demonstrates the government's commitment to privatize major state enterprises. The level of interest in the transaction and the price bid represent a vote of confidence by the international investor community in the Nicaragua's emerging economy and in the policies of the government.
The successful transaction constitutes a landmark in the country's path towards full economic recovery, said Andre Cracco, Director of IFC's Corporate Finance Services Department. Besides reinforcing BANIC's capital structure and lending capacity, the privatization also contributes to the strengthening of the financial sector by improving financial services and fostering greater competition within the local banking community.
As of November 1998, BANIC had assets in excess of $150 million, approximately 65,000 depositors and 23 branches throughout the country. The proceeds from the subscription of the shares will reinforce the financial position of BANIC, strengthen its overall market position, and allow it to expand its lending capacity.
Financial support provided by the Government of Japan, through its Trust Fund Program with IFC, was instrumental in financing the international transaction lawyers and loan portfolio analysts that formed a key part of the IFC team.
IFC's Corporate Finance Services Department specializes in providing financial advisory services for strategic sales and privatizations. IFC, part of the World Bank Group, fosters economic growth in the developing world and emerging market economies by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.
