Responsible exit:

promises kept?

When we started to prepare our exit from the Cambodian microfinance institution AMK in 2018, we introduced a formal screening process to assess the suitability of potential buyers. The idea was to guarantee a responsible exit and protect the institution's social mission. Now, 4 years later, we are reviewing the impact of our exit.

Today AMK has grown into one of the largest financial institutions operating in rural Cambodia. Our journey together started in 2012, when Incofin’s rural-focused fund, RIF II, invested a 25% stake in the institution. It exited in 2018, selling its stake to the Shanghai Commercial and Saving Banks (SCSB). SCSB is a retail bank serving micro, small and medium enterprises in its home markets in Taiwan.

John Yung, Executive Vice President of SCBC, explains where SCBC’s interest came from: “We wanted to have a bigger presence in South East Asia, and were looking at countries like Myanmar, Laos, Vietnam and also Cambodia. We were told that in Cambodia there was an opportunity in microfinance. At first, we were a bit sceptic about the idea, but as time went on, we started to remind ourselves of the social mission of our bank 100 years earlier. And what we did 100 years earlier was providing small loans to small Chinese entrepreneurs.”

SCBC was founded in Shanghai in 1915. In that time, banking in China was only available for the rich or major corporations. Mr. K.P. Chen started the Shanghai Commercial and Savings Bank emphasising the word “savings” to encourage people to start saving. Unlike other Chinese banks, it provided service to everyone and even offered microfinance lending. It is considered to be the first mass-market bank in China.

“The history of SCBC is what sparked our interest that first meeting in London”, says Tanmay Chen. “It offered microfinance before it was even called microfinance.” Tanmay Chen is the CEO from Agora, the founding shareholder of AMK, which was kept as a minority shareholder for a 2-year transition period.


“The history of SCBC is what sparked our interest that first meeting in London. It offered microfinance before it was even called microfinance.”

– Tanmay Chetan, CEO from founding shareholder Agora, who was kept as a minority shareholder for a 2-year transition period.

Fitness and Compatibility Review

The former investors decided to implement a formal screen process and developed a so-called “Fitness and Compatibility Review”. Each interested buyer would be screened against a list of financial and non-financial criteria to assess their compatibility with AMK’s corporate culture and their commitment to respect and maintain AMK’s social mission. By rating potential buyers against each criterium, the selling investors could engage in meaningful conversations.

Tanmay Chetan: “We felt it important to involve the AMK management to the process of selecting the new buyer. The decision had to be backed with AMK’s CEO Kea Borann, as he was the one that would be most affected by it.

We also wanted to make sure the social mission of AMK would be preserved and strengthened. That is why I believe the composition of the team conducting the review was crucial .”

The two people leading the review were Peter Power, former CEO of AMK, and the Chair of the Social Performance Committee, Dina Pons from Incofin IM.

Kea Borann, AMK’s current CEO, confirms this was an appropriate way of working. “It reassured us that the new investor would help us achieve our mission. We also really wanted to keep pricing and evaluation out of the initial conversations: we first wanted to be sure we had a first choice. Otherwise, pricing and evaluation could determine the rest of the conversation. This helped us do it right.”

Social Performance Committee

John Yung explains why SCBC preferred that Incofin’s representative at the Board would continue to chair AMK’s Social Performance Committee in independent capacity.

“We wanted to make sure the committee was chaired by an expert. Yes, we had a strong commitment to social performance, but we also needed the insight and knowledge of an specialist.”

Promises kept?

The Fitness and Compatibility Review was meant to protect the social mission of AMK. After all those years we are now evaluating whether it did, and how our exit affected AMK’s financial performance and impact profile.

AMK is still strongly committed to its original social goals: the institution maintained its focus on rural and female clients. The average loan size has increased, but it is still one of the lowest in the Cambodian market and remains at only 63% of GNI per capita. 

AMK successfully renewed its Client Protection Principles certification. The entry of a new commercial shareholder did not translate into more aggressive sales practices by AMK.

Years after, it seems that the original intent has become reality: with SCBC, AMK has found itself an anchor investor that respects its social mission while helping the microfinance institution thrive. To can conclude with John Yung’s hopeful words: “We hope to help the Cambodian people move to middle class as a nation by protecting their independence as individuals. A country can only grow strong with an economy based on that middle class and its SMEs.”