GrupoSura’s Share Sale Seen Easing Ratings Pressure

Colombia’s Grupo de Inversiones Suramericana (GrupoSura) is targeting October for an up to $2.1bn equity follow-on to partially fund the recent acquisition of ING’s LatAm assets and to help it avoid any potential downgrade that could result from the purchase, say bankers. On Wednesday, the company’s bond dipped about a point after S&P put its BBB minus rating on negative watch. The agency said that incremental indebtedness from the transaction could hurt the company’s credit profile and that it would wait to see how GrupoSura planned to pay for the acquisition before acting further. “They don’t want to lose their investment-grade rating and they will do whatever they have to do to avoid getting a downgrade,” says a DCM banker familiar with the company. The conglomerate had in June approved the sale of up to 130m new shares, and now plans to raise $1.4bn-equivalent in the local markets and another $700m abroad. Banks could be named as soon as next week, according to an investor relations official. GrupoSura agreed this week to acquire the ING assets for EUR2.68bn ($3.9bn), consisting of EUR65m in assumed debt and EUR2.615bn in cash. It is putting up $500m in cash and can also tap credit lines it has with a pool of 6 international and 3 domestic banks. Bankers, however, think that the company will avoid leaning too much on bank debt in an effort to placate rating agencies. “They have a lot of financing options and they will go for whatever hits leverage ratios less and doesn’t compromise their ratings. Shorter-term bank financing will put a lot of pressure on their ratings,” the DCM banker says. The company official declines to disclose the group of banks or the terms on the credit facilities. GrupoSura also says it intends to combine the pension funds it bought this week with ones it owns already, placing them in a listed holding company at some point in the next few years. In addition to the assets purchased from ING, GrupoSura owns minority positions in Colombian c