Aval Buys Into CentAm Via Credomatic

Colombian conglomerate Grupo Aval – the parent company of Banco de Bogota, Banco Popular and Corficolombiana, among other financial institutions – says it has agreed to acquire Panama-based BAC-Credomatic for $1.9bn. Analysts view the deal as a positive strategic move for the Colombian group, which is expanding into Central America. “This is a positive move for Aval because it allows it to enter the Central American market with a strong position,” says Interbolsa equity analyst Jose Restrepo. Aval is paying a “reasonable” price for Credomatic, says David Pelaez, equity analyst at Colombian brokerage Bolsa y Renta. He calculates that the deal value is equivalent to 12.8x Credomatic’s 2009 P/E ratio. Pelaez adds that Credomatic is profitable and a good fit with Aval’s banking operations. The buyer does not reveal how it intends to finance the acquisition, but analysts point to rumors of Aval’s intentions of selling equity in the US as a way to pay. Restrepo says the group could also issue a bond to finance the deal, or join forces with a subsidiary such as Banco de Bogota. Banco de Bogota announced in June it had made an offer for Credomatic, but General Electric, which holds 75% of the target, did not respond by the deadline. Besides Panama, Credomatic, which had $7.7bn in assets in 2009, has operations in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Mexico and Florida. Credit Suisse was Credomatic’s financial advisor while Latham & Watkins provided legal advice. Aval’s legal advisors were Davis, Polk & Wardwell, Martinez Neira Abogados and Arias & Munoz.