Experian Clinches Remainder of Brazilian Credit Bureau

Irish credit information provider Experian has agreed to spend BRL3.1bn ($1.5bn) to buy the remaining piece of Brazilian credit bureau Serasa from a group of banks, it says. The deal for the 29.6% stake had been expected since Experian originally bought control in 2007, though the transaction comes at a higher price given the growth in the industry since then. Experian will initially pay cash for the stake, and may also use existing credit facilities. The price may be subject to a cash adjustment. Experian paid $1.2bn for the first 70%, and had an option to buy a further stake, exercisable beginning June 2012. Since then, Experian has been negotiating with the group of banks to extend commercial data supply arrangements. Serasa has seen annual revenue growth of 20% and EBITDA growth of 28% over the last three years. An Experian spokesperson says that the multiple it pays in 2012 is actually slightly lower than the multiple it paid in 2007, citing growth in earnings as a key factor. Experian is paying 8.5x Ebitda for the whole 99.6%, analysts say. A recent change to legislation in Brazil expanding the amount of data used in credit checks means Serasa is likely to continue to grow quickly, with more individuals in credit databases and more frequent use of the data. Instead of simply a record of “negative” data such as defaults, “positive” “data” such as payments made will now be used in Brazil, part of a larger trend that has seen valuable risk implications in other LatAm countries. “If you can reduce the interest rates without increasing the risks to the bank then you have more stable banks and lower interest available to the Brazil consumer,” says an equity analyst covering the sector. The 29.6% interest is to be bought from BIU Participacoes – representing 24.4% and made up of the stakes of Itau and Bradesco – as well as by Banco Bradesco Financiamentos, Grupo Santander and HSBC. The deal is expected to close by the end of the year, pending shareholder and regulato