Snapshot: Sale of El Salvador's Procredit to Honduras' Atlántida

The head of El Salvador's financial regulator SSF confirmed Honduras' Grupo Atlántida has finalized the purchase of local lower-tier bank Banco Procredit, as the former seeks to broaden its footprint in the neighboring country.

Speaking at an event on October 31, SSF head Ricardo Perdomo said the El Salvadoran bank would begin operating as Banco Atlántida de El Salvador in the coming days, according to media outlet El Salvador.com.

To fund the purchase and other investments, the Honduran bank's holding company, Inversiones Atlántida (Invatlan), tapped Singapore's stock market to raise US$150mn.

In a July 28 statement following the deal, law firm Shearman and Sterling - which provided legal counsel - said the debt issuance represented the first international capital markets transaction by a Honduran corporate. The law firm added that investment bank Oppenheimer & Co acted as sole book-runner and manager of the operation.

An internal memo obtained by Central American news outlet El Economista in September indicated Procredit's German parent Procredit Holding originally agreed to sell the El Salvadoran unit in October last year.

The memo also indicates the sale involved the purchase of 99.697% of Procredit stock for US$26.5mn. However, more recently, the new director of Banco Atlántida de El Salvador, Arturo Mera, confirmed to financial news outlet Estrategias y Negocios that the purchase involved an initial investment of roughly US$30mn, with an additional US$15mn expected in the short-term.

One of the largest financial institutions in Honduras, Atlántida is set to use the remaining funds from the debt issue to shore up energy and infrastructure investments in Honduras, as well as to back its growing involvement in El Salvador, where it already operates one of the country's largest pension fund managers, AFP Confía.