Scotiabank says it has reached an agreement to buy a 51% stake in Colombia’s fourth-largest pension fund company.
The bank (TSX:BNS) is not disclosing the terms of its transaction involving Colfondos AFP.
After the deal is complete, Scotiabank says Mercantil Colpatria will retain 49% ownership in the firm.
Mercantil Colpatria acquired a majority stake in Colfondos in 2009.
Anchor Fund and Linzor Capital Partners currently hold minority stakes in Colfondos and have agreed to them to Scotiabank as part of the transaction.
Scotiabank, Canada’s most international of banks, says the deal is in line with its goal of increasing its footprint in Latin America.
Scotiabank already operates pension fund company Profuturo AFP in Peru, which it acquired in 2008, and Scotia Crecer AFP in the Dominican Republic, which it acquired in 2007.
Colfondos has 27 offices in 20 cities across Colombia and 1,200 employees since it was founded in 1991.
Desjardins analyst Michael Goldberg said in a note that he viewed the acquisition as positive, “demonstrating in particular its approach to acquisitions — go for strong franchises, leverage best practices and generate a high return (that is) visible in a very short time frame.”
“Given our concern about slower growth and weaker profitability in Canadian banking and over-reliance on trading revenue, Scotia’s diversity stands out, with robust growth in international banking,” Goldberg said.
“Management will continue to focus on business in high-growth markets given that the economic growth potential from developing economies in Latin America and the Asia-Pacific is expected to remain relatively buoyant,” he added.
Scotiabank and its affiliates serve some 19 million customers in more than 55 countries around the world.