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.