UBS Invests $506 Million in Colombia’s Grupo Sura After ING Asset Purchase

UBS AG (UBSN), Switzerland’s biggest bank, invested $506 million in Grupo de Inversiones Suramericana SA (GRUPOSUR), helping the Medellin-based company raise funds to pay for its purchase of Latin American assets from ING Groep NV. (INGA)

UBS bought 30 million shares for an average 32,500 pesos each, part of a sale of 120 million shares that raised 3.5 trillion pesos ($1.8 billion), Grupo Sura said in a filing. 

The parent company of Colombia’s biggest lender said earlier this year it would raise as much as 3.9 trillion pesos in a share sale to help pay for the 2.7 billion euro ($3.6 billion) purchase of ING assets.

Grupo Sura agreed in July to buy ING’s pensions, life insurance and investment management operations in Chile, Colombia, Mexico, Uruguay and Peru. 

The Colombian company has also said the International Finance Corporation, Sociedad Bolivar SA and a third co-investor will help fund the purchase.

“Being able to sell that amount at this moment of risk is still significant,” said Jairo Agudelo, an analyst at Celfin Capital in Medellin. 

“With the funds they’ve raised, they would only have to get another $500 million in debt for the ING purchase, which is not very significant for the company and shouldn’t lead to a downgrade.”

Standard & Poor’s said July 27 it may cut the company’s ratings to junk as “incremental indebtedness” from the ING acquisition could weaken the company’s ability to repay debt. S&P put its ratings of Sura on CreditWatch with negative implications.

Shares Fall

Sura shares fell 1.4 percent to 31,000 pesos at 9:49 a.m. Bogota time. Colombia’s benchmark IGBC Index sank 1 percent.

Sura’s sale represents the country’s biggest offering in four years. The sale price was 3.4 percent above yesterday’s closing price.

The share sale, along with co-investors and cash on hand would leave the company with a “very low level of additional debt,” Andres Bernal, the company’s vice president of investment, said in an e-mailed response to questions Nov. 21

Colombian share offerings since October, including those of Ecopetrol SA, Empresa de Energia de Bogota SA and Banco Davivienda SA, failed to attract enough demand to meet their maximum targets amid reduced appetite for emerging-market assets amid concerns about the debt crisis in Europe and slowing global growth, said Santiago Melo, an analyst at Alianza Valores SA.