LatinFinance - January/February 2013 - 49

chance. It was clearly an audacious move
on our part but we proceeded boldly,
knowing that the risk at stake was a highly
calculated one.”

for ING.
The deal is the largest intra-regional
cross-border transaction by a LatAmbased buyer, Crémoux says, and the first

term. The financial sector has been
LatAm’s most active in terms of M&A
in 2012, highlighting opportunities for
emerging market corporates while parts
of the developed world struggle.
The Colombian group has grown
to become a force to be reckoned with.
“It is the creation of a Latin American
champion,” Crémoux says. “Now they are
a top player in the pension fund sector in
the region.” LF
____________________________________

Domestic M&A
Deal

Telefónica Moviles Colombia /
Colombia Telecomunicaciones
____________________________________

M
Bojanini: regional ambitions
“Grupo Sura was the absolute
underdog of that process,” says Gérard
Crémoux, head of investment banking
at UBS, which advised Sura along with
Bancolombia and JPMorgan. “They were
competing with MetLife, with Prudential,
with Principal, which are much better
financed, much bigger and much better
known companies. Frankly, Grupo Sura,
before this transaction, was not a known
company.”
In addition to Sura not being as wellknown, Bojanini identifies valuing the
assets in different countries and gathering
the financing as the main challenges.
The deal gave Sura the pension, life
insurance and investment operations of
ING in Chile, Mexico, Peru, Colombia
and Uruguay. ING had 10 million
customers and $70 billion in assets under
management, giving Sura nearly five
times what it had previously managed in
pensions.
The transaction came at a multiple
of 14.9 times expected 2012 earnings
and 1.8 times book value. As with many
regional financial sector acquisitions,
analysts found the price on the high side
at the time, representing a good valuation

time a LatAm company has bought into
five different countries in a deal of this
size. Goldman Sachs managed the sale
process for ING.
Grupo Sura was competing with
international bidders that didn’t share its
need for external financing. It had wanted
to pay in shares but had to quickly come
up with an all-cash deal ahead of final
bids.
JPMorgan and UBS provided a $1.65
billion bridge loan with BBVA, Deutsche
Bank and HSBC. Bancolombia organized
an $800 million-equivalent loan from a
group of Colombian banks.
In November 2011, Sura raised
$1.8 billion-equivalent in an equity
follow-on to help pay down the bridge
financing. Bancolombia and Santander
led. Market conditions were rough, and
UBS participated for nearly a quarter of
the deal. Sura also counted on additional
equity investment from Grupo Bolívar, the
International Finance Corporation (IFC),
General Atlantic and Bancolombia.
Sura will focus on organic growth
ahead, and will also keep an eye out for
M&A activity, Bojanini says, and regional
equity listings are possible in the near

erging the Telefónica Móviles
Colombia wireless unit and the
fixed-line operations of Colombia
Telecomunicaciones (Coltel) seemed
a clear way to face the challenge from
competitors that had already integrated
their fixed and mobile operations.
But this was no simple company
reorganization.
The government – which held 48% of
Coltel – would have to be involved. That
meant compensation and negotiations
over the stake in the combined entity, not
to mention the authorization process.
Spain’s Telefónica held the remaining
52%.
There were also debt obligations
to divide. These included some 3.5
trillion pesos ($1.91 billion) owed to
the Patrimonio Autónomo Receptor de
Activos (Parapat), a trust controlled by
Coltel’s pension fund that owns fixed-line
operating assets which Coltel leases.
An expected reduction in net debt of
about $1.7 billion as a combined entity
helped motivate both parties, although
they had differing ideas about how the
combination should proceed.
Talks lasted more than a year.
Telefónica came out controlling
70% of the merged Colombia
Telecomunicaciones entity with the
Colombian government holding the
balance. The government has a right to

January/February 2013

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