Cash-Hungry Santander Sells Colombia Unit

Chile’s CorpBanca has agreed to acquire nearly all of Santander’s Colombia unit, in a deal valued at $1.225 billion plus interest. The move marks a substantial sale for the Spanish bank which has been selling assets in LatAm in an effort to bolster the parent’s balance sheet. CorpBanca will acquire a 95% stake for $1.155bn, financed with its own cash and a $450m capital increase from its holding company, the Saieh Group’s CorpGroup Interhold. CorpGroup Interhold also plans to purchase at least an additional 2.85% stake from the remaining 5%. All in all, the CorpBanca and CorpGroup purchases will amount to $1.225bn plus accrued interest of 180-day dollar Libor +1% per year, a deal seen as pricey, but not out of line in a neighborhood where bank assets are expensive. “This is a good asset, and one of the assets Santander can sell at a higher multiple, a bit expensive to the average in Colombia,” says a New York-based FIG analyst, spotting the multiple at around 3.0x book value, compared to Bancolombia trading at 2.4x. A CorpBanca spokeswoman says the acquisition has an implied multiple of 2.7x. The numbers compare with the 3.0x-3.6x seen in Scotia’s $1bn acquisition of 51% of Colpatria in October, also seen as a steep price to enter Colombia. Still, with Colombia attracting lots of attention in the financial space recently – Peru’s BCP paid $76m for 51% of brokerage Correval last week – the New York analyst imagines several foreign and domestic bidders were interested, even at the high prices the country demands. Less clear is to what extent CorpBanca might be able to grow in Colombia. CorpBanca did not have an outside advisor on the deal, the spokeswoman says. Santander officials could not be reached. CorpBanca claims the deal makes it the first Chilean financial institution having a foreign bank subsidiary. At the same time, CorpGroup has struck an agreement to bring in Grupo Santo Domingo as an investor in CorpBanca for $100m. Santander Colombia has $4bn in total a