Colombia's Sura, Scotiabank buy BBVA Peru fund for $516 million

LIMA/BOGOTA Wed Apr 24, 2013 4:25am IST

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LIMA/BOGOTA (Reuters) - Colombian financial group Sura SIS.CN and Bank of Nova Scotia (BNS.TO) said on Tuesday they bought the Peruvian pension fund BBVA Horizonte for a total of $516 million.

Each company paid around $258 million for a 50-percent stake in Horizonte, the companies said. Horizonte has about $9 billion in assets under management.

Horizonte has a 23.5 percent share of all deposits in Peru's private pension fund system. It operates as an arm of BBVA Continental, one of Peru's top banks owned by Peru's Grupo Brescia and Spain's BBVA (BBVA.MC).

BBVA in Spain said it will have a net gain of $271 million from the sale.

Canada's Bank of Nova Scotia, known as Scotiabank in Peru, made the purchase through its local pension fund Profuturo, while Sura bought its stake via its Integra pension fund unit.

The purchases were made on Lima's stock exchange. Shares of Horizonte HOR.LM lost 0.15 percent to 20.69 soles. Traders said all of the fund's 64.6 million shares were offered.

"The total price amounts to $516 million and is absolutely 50 percent each" of Horizonte, Sura Asset Management Chief Executive Andres Castro told reporters in Lima.

Integra and Profuturo both plan to absorb half of Horizonte's accounts over the next six months.

SURA TO LEAD LOCAL MARKET

In 2011 Sura bought the Latin American pension assets of Dutch bank ING for $3.5 billion. Sura now operates in Chile, Mexico, Peru, Uruguay and Colombia. Its insurance business has also expanded in the region.

Including the Horizonte clients, the deal means Integra will have 41.5 percent of Peru's private pension assets and 38.6 percent of its clients, Castro said. That would make it the biggest of the handful of pension funds in Peru.

Profuturo said its share of the market will rise to 27 percent of overall funds and 35 percent of clients.

Besides Horizonte, Integra and Profuturo, Peru's private pension fund industry also includes Prima (PRI.LM), owned by leading bank Banco de Credito del Peru (CRE.LM).

The four funds manage about $30 billion and have some 5 million clients. The funds mainly invest in infrastructure projects and on the local bourse.

Peru's government recently overhauled fees charged by private pension funds as part of a larger effort to enroll more Peruvians in the retirement system and attract new providers to the system.

In December, Chilean pension fund Habitat HAB.SN shook up the industry, saying it would slash fees to a fraction of what competitors were charging in exchange for the right to sign up all new contributors for two years. It will start operating in May.

Peru's government largely dismantled the public-sector pension system in the 1990s as part of deep free-market reforms that some economists say have helped turn the Andean country into one of the fastest-growing economies in Latin America.

(Additional reporting by Ursula Scollo in Lima; Writing by Terry Wade; Editing by Andrew Hay and Carol Bishopric.)

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