Sura Gets Support on Vital Equity Funding

Grupo de Inversiones Suramericana’s (GrupoSura) COP3.5trn ($1.8bn) equity follow-on last week helped it complete the funding requirements for its acquisition of ING’s LatAm assets in what the company described as Colombia’s largest equity raise by a non-government entity. But tough market conditions have meant that the issuer required the support of a number of co-investors to raise the desired equity financing and stave off any threats to its investment grade rating. This includes Switzerland’s UBS which bought 30m of the shares for a total of COP975bn ($502m), or about a quarter of the entire offering. “An agreement with UBS was already in place, as they were acting as financial advisor in the negotiation process,” a Suramericana spokeswoman says. She adds that the follow-on was done during challenging conditions, but the issuer is satisfied with the result. Indeed equity financing was seen as the best way to ease pressure being exerted by the ratings agencies like S&P, which placed the company’s BBB minus rating on creditwatch earlier this year after noting that incremental indebtedness from the acquisition could impact GrupoSura’s credit profile. Last week GrupoSura also announced that Bancolombia, which is part of the conglomerate’s investment portfolio, was undergoing the required analysis and internal approvals to become a co-investor as well. Bancolombia, along with Santander, led the transaction, while UBS was one of the original acquisition bridge lenders along with BBVA, Deutsche Bank, HSBC and JPMorgan. This follows similar moves by the IFC and Sociedades Bolivar which respectively took 5% and 10% stakes in the pension and insurance business acquired from ING for $3.76bn.Local brokerage Bolsa y Renta calculates that after minority stake investments, the FO and cash on hand, GrupoSura needs to raise just COP1trn ($500m) in debt, though Bancolombia’s contribution may well cover a large portion of that. “We believe that it shouldn’t lose its investment grad