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Due diligence in the course of an acquisition of 25% of the shares of one of largest commercial banks in Uzbekistan

Friday, 10 May 2019

Kosta Legal has completed a full-fledged legal due diligence on an Uzbek private commercial bank for one of the country’s largest investment funds, who was considering the acquisition of 25% of the bank’s stock as a strategic investment.

This full due diligence on a commercial bank was a rare case for the Uzbek legal market. In practice, due incorporation, the presence of necessary licenses, due appointment, capacity and authority of bank’s officers are the only things checked. In the given case, however, the lawyers of Kosta Legal reviewed the bank’s documentation dating back to the very moment of its incorporation, including the documents on the creation of bank’s corporate bodies, its corporate structure, formation of the bank’s charter capital, due placement of shares, title documents to immovable property, internal policies and licensing agreements and certificates. The due diligence report also included a detailed section on the regulatory environment within the Uzbek banking industry.

The bank is a notable player within the Uzbek financial market, offering its services to both individual and corporate clients. It has a traditional set, for the Uzbek banking sector, of financial products for businesses, including short- and medium-term loans, financial lease products, bank guarantees and letters of credit. The bank has attracted several credit lines of major financial institutions and has some of them amongst its minority shareholders.

The investment fund in question has been established based on an intra-governmental agreement and has a steady success story of operating in the Uzbek investment market.