BBVA Exits Chilean Pension

MetLife and BBVA have put terms on the anticipated sale of the Spaniard’s AFP Provida Chilean pension unit to the American insurer, with the $2bn value generally seen as fair. In the deal, BBVA has agreed to sell its 64.3% of Provida for $1.52bn, and MetLife will tender publicly for the remainder, the two parties say. MetLife will offer holders $6.04 per share for each of the 118m shares making up the public float. Provida holders can also expect another $365m in dividends as a result of the sale. Overall the valuation is seen as fair, and lower than other recent deals in the sector. “The purchase of Provida will enhance MetLife’s business mix by increasing its exposure to faster-growing and higher-return emerging markets,” JPMorgan says in a report, calling the deal “fair” and a “strategic positive.” The shop finds that the deal values Provida at 4.4% of AUM and 11x 12-month earnings. This compares to the 4.7% of AUM and 13x earnings that Prudential Financial paid for AFP Cuprum last year in a $1.5bn transaction, the most recent previous sale of a Chilean pension. BBVA was seen selling its Mexican pension at around 14.5x in October, and selling its Colombian unit at around 13.5x in January. The US insurer says it expects to boost its earnings from EM to 17%, from 14%. As part of a shift to less capital intensive products, MetLife says the deal should be immediately accretive to earnings, at approximately $0.05 per share in 2013 and $0.15 per share in 2014. BBVA expects a EUR500m ($685m) post-tax gain from the sale. The transaction also includes a small asset management business in Ecuador. MetLife is paying cash. BBVA has sought buyers for its pension-fund assets in Chile, Mexico, Peru and Colombia since May of last year. It agreed in November to sell the Mexican operation to Banorte for $1.6bn and the Colombian operation to Grupo Aval in January for $530m. Its Peruvian business remains on the block. Bank of America Merrill Lynch and law firms Sakdden Arps and Prie