Scotia Makes Colombia, Mexico Buys

Scotiabank continues to expand in the LatAm, with a pair of small but strategic buys in Colombia and Mexico. The Canadian bank has agreed to buy a 51% stake in Colfondos AFP from the Colpatria holdco. The deal follows last year’s $1bn buy of 51% of Colpatria itself, though Scotia says Tuesday’s is a separate transaction. Colfondos is the fourth-largest out of five pension funds in Colombia, accounting for about 10% of the assets under management, but people following the sector point to strong growth possibilities. Scotia does not disclose the size of the deal, saying the terms of the transaction are not financially material. “This is relatively small, but it is important to have integration with the other Colpatria assets,” says a Colombia-based analyst following the country’s banks. He notes that Colfondos has about $110m-equivalent in equity, and that previous deals in the sector have gone at 1.6x-1.8x equity, but cautions that such a comparison is difficult as several other factors would be in play. Scotia specifically highlights expanding Colfondos, which has AUM of $9.25bn-equivalent, in its plans. Scotia also operates pension funds Profuturo AFP in Peru, acquired in 2008, and Scotia Crecer AFP in the Dominican Republic, acquired in 2007. Separately, in Mexico, Scotiabank has agreed to acquire all of the shares of Credito Familiar from Banamex. It does not disclose the value of the transaction.