Indusval's capital ratio set to rise to 27% after investments from new partners

- Friday, March 25, 2011

Indusval's capital ratio set to rise to 27% after investments from new partners

Brazilian midsized bank Banco Indusval's capital adequacy ratio is set to rise to 27% after its upcoming capital increase, local news service Agência Estado reported.

The bank had a capital adequacy ratio of 17.6% at the end of last year, above the Brazilian central bank BCB's minimum requirement of 11%, but a far cry from the 24% it had before the crisis in 2008.

The capital increase will inject 200mn reais (US$121mn) in fresh funds into Indusval from Warburg Pincus-controlled private equity fund WP X, local investors and JP Morgan.

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Despite the strong capital position that Indusval will have after the increase, the bank will be conservative in its lending and avoid a high leverage ratio, said Jair Ribeiro, one of the local investors taking part in the deal. Ribeiro will be the bank's co-chairman.

The new partners will become minority shareholders through the increase and issue of convertible bonds. WP X is likely to hold 22.7% of Indusval's equity and will get a seat on the board, while JP Morgan will have a 2.5% stake through purchasing a portion of the bonds to be issued.

The São Paulo-based bank focuses on large and midsized enterprises. It closed last year with 3.3bn reais in assets and 1.9bn reais in loans.