TPG Capital Management will acquire a majority stake in Sri Lanka-based Union Bank of Colombo (UBC) for $113m in what is said to be the country’s biggest buyout deal.

The Central Bank of Sri Lanka (CBSL) has already granted approval for TPG’s investment in UBC.

As per the agreement, TPG will invest up to about $117m for up to 70% of the issued share capital, and warrants that, if exercised in full within their six-year term, would increase TPG’s interest in UBC to 75%.

TPG partner and India head Puneet Bhatia said, "Together with Union Bank, we are well placed to seize opportunities in the local market and develop a strong retail bank franchise."

UBC noted that the transaction will boost its Tier 1 capital and enable the lender to meet the minimum capital requirement of LKR10bn set by the Central Bank of Sri Lanka, which will come into effect from 1 January 2016.

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Union Bank chairman Alex Lovell said, "A foreign investment of this size and nature is unparalleled in the banking industry in Sri Lanka.

"Union Bank will be able to tap into TPG’s operational expertise and global resources to not only strengthen Union Bank’s balance sheet but also introduce new products and expand our network in order to offer better services to our customers."

CIMB Investment Bank acted as a financial adviser for TPG while legal advice was provided by from Cleary Gottlieb Steen & Hamilton.