Indusval partners with Warburg Pincus fund, JP Morgan to take minority stake

Wednesday, March 23, 2011

Brazilian midsized bank Banco Indusval has reached an "investor agreement" with Warburg Pincus-controlled private equity fund WP X and local investors, and will sell a minority stake to US financial services firm JP Morgan.

The bank will increase its capital by up to 289mn reais (US$174mn) through the issuance of up to 9.95mn ordinary shares and up to 21.5mn preferential shares, Indusval said in a statement.

Under the agreement, WP X will buy ordinary and preferential shares of some 150mn reais, the owners of local logistics and foreign trade firm Sertrading will purchase ordinary and preferential shares worth some 30mn reais, and the controlling shareholders of Indusval will buy ordinary shares to the tune of some 21mn reais.

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WP X is set to hold around 22.7% of Indusval's total capital after the increase, which is subject to regulatory and shareholder approval. WP X will get one seat on the Indusval board.

Indusval said Warburg Pincus will be a key partner in its planned business expansion, which is aimed at growing its assets and becoming one of the leading players in Brazil's corporate fixed-income market. Warburg Pincus is a global private equity group with investments of around US$35bn in more than 600 companies worldwide.


Under the agreement, the bank will also issue convertible bonds. JP Morgan has committed itself to buy a portion of these bonds, which will see it hold preferential shares representing 2.5% of Indusval's total capital. Indusval noted that JP Morgan would not participate in management of the bank.

After the capital increase, Indusval's board will determine when and where the bond issue will take place, and the amount to be issued could be the equivalent of up to 3.2% of the bank's total capital.

Indusval also said JP Morgan would provide it with a two-year credit line of US$25mn.


In the same statement, Indusval said it would invest 25mn reais in Sertrading, which would give it a 17.7% stake in the company - and the right to buy all of Sertrading's shares within two years.

Through Sertrading, Indusval is looking to boost its presence in the foreign trade segment, gain access to larger corporate clients and higher-quality assets, diversify its risks and broaden its product portfolio.