Colpatria likely to use credit lines, shares to buy back GE's 49.7% stake - analyst

Tuesday, March 15, 2011

Colombian conglomerate Colpatria will likely finance the purchase of GE Capital's 49.7% stake in its banking unit Banco Colpatria with a combination of borrowing money and issuing shares, Leonardo Rueda, fixed income analyst at local brokerage Alianza Valores, told BNamericas.

"They should take advantage of the fact that they could take on debt at very competitive rates, and finance a portion of the acquisition through a share issue given the market's appetite for new shares, especially if they come from a segment with such good prospects as the financial sector," he said.

Colpatria was delisted from the local stock exchange after inking the deal with GE Money in 2007.

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On Monday (Mar 14), Colpatria acknowledged that it was in talks with General Electric (NYSE: GE) regarding the latter's stake, but said that no formal agreement had been reached at the time.

Earlier this week, sources confirmed to BNamericas that the Colombian holding had agreed to buy back the stake for some US$550mn as a due diligence valued the bank at US$1.1bn.

In a filing sent to local regulator Superfinanciera, the holding's chairman, Eduardo Pacheco, said the agreement signed with GE Capital in June 2007 was still on.

GE Capital built its stake in Colpatria since 2007 through direct purchases and tender offers, and has the option to acquire up to an additional 25% stake in the bank by 2012.

GE Money has been reducing its investments in Latin America's banking sector after being hit hard by the global financial crisis, selling Central American financial group BAC Credomatic to Colombian financial banking holding Grupo Aval for US$1.9bn and its Argentine GE Money unit to local Banco Supervielle.

Colpatria is Colombia's eighth largest bank, commanding a 4.1% stake as of end-December.

The Colpatria conglomerate also operates in the insurance and construction sectors.