Colombia continues to lure global FIG powers
November 12, 2013
Companies and analysts see room for growth in Colombia in banking, insurance and other areas. AXA’s insurance buy is seen coming at an attractive valuation.
It has been a while since the large bank M&A deals of
2011-2012, but global financial players continue to target a Colombian
financial sector seen as offering strong growth prospects.
insurance group AXA became the latest, taking 51% of Colpatria’s Colpatria
Seguros insurance business in a EUR259m ($346m) transaction. High
valuations have become the norm in Colombia’s financial sector in the last few
years, though the multiple AXA paid was seen as reasonable.
the deal is valued at 13.0 times 2012 earnings, which we believe is attractive
for a company that has had a top-line [annual growth rate] of 28% since
2009 and has strong growth prospects going forward,” Heleva says in a note. The
bank says that insurance penetration in Colombia is still low, at 2.4% compared
with 3.7% in Brazil and 8.2% and 8.9% in the US and in France, respectively.
comparable transactions in LatAm are few, but the valuation compares well with
AXA and other global powers have done in the emerging markets. The 13 times
level compares to a 10 times figure in Zurich Financial’s $1.67 billion
purchase in 2011 of Santander’s LatAm insurance operations, and a 15-16 times
level seen in the $879 million purchase by Allianz of Turkey’s Yapi Kredi
Sigorta earlier this year.
week’s Colpatria deal was seen at 2.7 times price/book. Colpatria Seguros is
Colombia’s fourth-largest insurance company, with a market share of 7%. The
move is in line with AXA’s previously communicated emphasis on EM growth
itself was a target, with Scotia swooping in late 2011 for a 51% stake valued at about $1 billion.
The deal was seen coming at 12 times earnings, and more than 3 times
price/book value, according to analyst comment at the time.
Corpgroup followed, paying $1.23 billion for Santander’s Colombia operation, at 3 times
book. A year later, it bought Helm Bank for $1.28 billion, or 14-15
times earnings and 1.6-1.8 times book value.LF