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HUALING GROUP ENTERS INTO PRELIMINARY AGREEMENT TO ACQUIRE MAJORITY STAKE OF BANK REPUBLIC

Hualing Group Enters into Preliminary Agreement to Acquire Majority Stake of Bank Republic

The Chinese Xinjiang Hualing Industry and Trade (Group) Co., Ltd. (Hualing Group) entered into a preliminary agreement with the Societe Generale Group and the European Bank for Reconstruction and Development (EBRD), for the acquisition of Societe Generale‘s majority stake in Bank Republic, its Georgian subsidiary.

Hualing Group, a large private conglomerate based in Xinjiang Uygur Autonomous Region, China and the largest foreign investor in Georgia, mainly operates in the fields of building, managing and renting of trade centers and wholesale markets, as well as real estate, logistics, hotel construction and management, livestock husbandry and meat processing, etc. It also owns a banking subsidiary in Georgia, JSC Basis bank and other financial assets in China.

This transaction would help Hualing Group strengthen its banking arm in Georgia and in the Group’s business portfolio. According to the key transaction terms, Hualing Group would merge Bank Republic with its banking entity Basis Bank to create an universal bank that would expect to be firmly anchored as the n°3 player in the Georgian market.

After the merger, Hualing Group would own controlling stakes in the new combined bank and have majority on the Supervisory Board. Through this transaction, Hualing further demonstrates its long-term commitment to investments in Georgia and the development of the Group’s financial business sector.

Societe Generale Group would own approximately 8% of the shares in the new combined entity and remain a member of the Supervisory Board.

EBRD would also hold a minority stake of approximately 3.9% in the new combined entity and remain a member of the Supervisory Board as well as a committed financing partner for the Georgian banking market.

The transaction, which is conceived in the backdrop of China’s " One Belt, One Road" strategic initiative, will not only strengthen Hualing Group’s banking operations and promote a more balanced competitive structure in Georgia’s banking sector, but also benefit the bilateral economic and trade relationship between China and Georgia, and provide full range of quality financial services to inbound Chinese companies as well as local corporate and individual customers.

For this transaction, Hualing Group retained Shanghai Tuhong Investment Management Ltd. (Tuhong International) as its exclusive financial advisor, KPMG as its financial & tax due diligence consultant and the Georgian BLF law firm as its legal advisor.

This transaction is notably subject to further due diligence on Bank Republic and BasisBank, to binding contract negotiations and, as the case maybe, to the regulatory approvals and registrations in Georgia and in China.