--Generali to exit Mexican pension, insurance business
--Banorte to pay Italian firm $857.5 million for control of
JVs
--Acquisition spree continues for Mexico's third-biggest
financial group
By Amy Guthrie
MEXICO CITY--Mexico's third-largest bank, Grupo Financiero
Banorte SAB (GFNORTE.MX, GBOOY), demonstrated a hunger for more
acquisitions Tuesday with plans to buy out minority stakes in
pension and insurance joint ventures from Italian partner
Assicurazioni Generali (G.MI) for $857.5 million.
Banorte said in a statement that it reached the decision to
purchase Generali's 49% share in the joint ventures because it felt
that the existing structure doesn't allow those businesses to reach
their full growth potential. Banorte said it is analyzing
alternatives to finance the acquisition, and that the deal still
requires regulatory approval.
In a separate statement, Generali--which previously announced a
desire to exit some of its noncore investments--said it will
strengthen its liquidity and capital positions via the sale, which
is seen producing a capital gain of around 500 million euros for
the Italian insurer.
Generali Chief Executive Mario Greco said the minority position
"was no longer consistent with Generali's current strategy to
manage its invested capital actively." He added that Latin America,
and in particular Brazil, remains an interesting market for the
company.
Banorte, which two decades ago was a small, regional bank, has
grown exponentially via acquisitions. The financial group has more
than tripled its assets under management over the past five years,
to roughly $140 billion, and currently it co-manages Mexico's
biggest Afore pension fund. The bank has 22 million clients,
catering to a fifth of the Mexican population, and 27,000
employees.
Several analysts have expressed a desire to see Banorte put the
brakes on its spending spree since the bank closed earlier this
year on its joint purchase of Banco Bilbao Vizcaya Argentaria SA's
(BBVA) Mexican pension-fund business. That acquisition cost Banorte
around $800 million.
In an April interview, Banorte Chief Executive Alejandro
Valenzuela said the bank would continue to study opportunities for
growth and consolidation, although it also sees a need to pace
itself.
As of the end of April, Banorte's joint ventures with Generali
had combined excess capital of $79.5 million. Including that
capital, the bank said it has agreed to pay a valuation of 16.5
times 2012 profit for Generali's minority stake in the insurance
joint venture and 4.9 times 2012 book value for the pension
stake.
Banorte said that the Banorte Generali pension fund accounted
for 4.8% of Banorte's total assets in the first quarter, during
which the unit showed a net profit of less than $4 million, or 1.6%
of the financial group's total quarterly profit. The Banorte
Generali insurance business offers life, car, home and medical
coverage policies, ranking ninth in the Mexican market for policies
sold, the bank said. The insurance joint venture represented 1.9%
of Banorte's first-quarter assets and contributed 9% of the group's
quarterly profit, or about $22 million.
--Manuela Mesco contributed to this article.
Write to Amy Guthrie at amy.guthrie@dowjones.com
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