Celfin sees sale of AFP Crecer as positive for Bancolombia

Wednesday, February 2, 2011

Bancolombia's (NYSE: CIB) announcement of a plan to sell its pension fund assets in El Salvador, AFP Crecer, for US$103mn to its sister company, Colombian pension fund AFP Protección, is positive since the AFP is not a core asset for the bank and is in line with management's desire to reorganize its operational structure, financial services firm Celfin said in a report.

Bancolombia and AFP Protección are units of Colombian holding company Grupo de Inversiones Suramericana (OTC: GIVSY).

"Although we see the transaction as positive, its small scale is not significant enough to make us change our hold recommendation for Bancolombia and target price of 30,280 pesos per share and US$65.3 per ADR," the report reads.

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Bancolombia acquired financial conglomerate Banagrícola in El Salvador in 2007. The transaction included non-core business companies, such as AFP Crecer and the insurance companies Asesuisa and Asesuisa Vida, which Grupo Suramericana is also expected to buy soon.