European financial institutions have been retreating from Latin
America and selling what are often some of their most valuable
assets to raise funds. Other international players –
even some Europeans in better shape – have been
picking them up, as have cash-rich LatAm players with regional
When ING’s LatAm pension fund assets came up
for sale, the winner was not supposed to be a Colombian company
that few outside the region had heard of.
The resulting $3.8 billion sale was notable not only for
coming against the odds, but giving Grupo de Inversiones
Suramericana, or Grupo Sura, the platform for continued
"It was a very competitive process," says David Bojanini,
president of Grupo Sura. "We always knew that we had a
difficult task ahead of us, but at the same time we sensed that
we had a very good chance. It was clearly an audacious move on
our part but we proceeded boldly, knowing that the risk at
stake was a highly calculated one."
"Grupo Sura was the absolute underdog of that process," says
Gérard Crémoux, head of investment banking at
UBS, which advised Sura along with Bancolombia and JPMorgan.
"They were competing with MetLife, with Prudential, with
Principal, which are much better financed, much bigger and much
better known companies. Frankly, Grupo Sura, before this
transaction, was not a known company."
In addition to Sura not being as well-known, Bojanini
identifies valuing the assets in different countries and
gathering the financing as the main challenges.
The deal gave Sura the pension, life insurance and
investment operations of ING in Chile, Mexico, Peru, Colombia
and Uruguay. ING had 10 million customers and $70 billion in
assets under management, giving Sura nearly five times what it
had previously managed in pensions.
The transaction came at a multiple of 14.9 times expected
2012 earnings and 1.8 times book value. As with many regional
financial sector acquisitions, analysts found the price on the
high side at the time, representing a good valuation for
The deal is the largest intra-regional cross-border
transaction by a LatAm-based buyer, Crémoux says, and
the first time a LatAm company has bought into five different
countries in a deal of this size. Goldman Sachs managed the
sale process for ING.
Grupo Sura was competing with international bidders that
didn’t share its need for external financing. It
had wanted to pay in shares but had to quickly come up with an
all-cash deal ahead of final bids.
JPMorgan and UBS provided a $1.65 billion bridge loan with
BBVA, Deutsche Bank and HSBC. Bancolombia organized an $800
million-equivalent loan from a group of Colombian banks.
In November 2011, Sura raised $1.8 billion-equivalent in an
equity follow-on to help pay down the bridge financing.
Bancolombia and Santander led. Market conditions were rough,
and UBS participated for nearly a quarter of the deal. Sura
also counted on additional equity investment from Grupo
Bolívar, the International Finance Corporation (IFC),
General Atlantic and Bancolombia.
Sura will focus on organic growth ahead, and will also keep
an eye out for M&A activity, Bojanini says, and regional
equity listings are possible in the near term. The financial
sector has been LatAm’s most active in terms of
M&A in 2012, highlighting opportunities for emerging market
corporates while parts of the developed world struggle.
The Colombian group has grown to become a force to be
reckoned with. "It is the creation of a Latin American
champion," Crémoux says. "Now they are a top player in
the pension fund sector in the region." LF