Credicorp offers Andean i-bank template
Mila impetus for regional consolidation; Aim more regional than country specific
Credicorp’s creation of a new pan-Andean investment bank has increased the prospect of further strategic tie-ups between such banks in the region.
Independent investment banks in Chile, Colombia and Peru report they are being approached constantly by international, regional and local market participants, and further consolidation in the near future is all but certain.
Banco de Crédito del Perú, Credicorp’s subsidiary, acquired 51% of Colombian brokerage firm Correval in December 2011 and at the end of April it announced it will acquire 60.6% of leading Chilean investment bank IMTrust. The creation of a pan-Andean investment bank follows BTG Pactual’s acquisition of Chilean investment bank Celfin, which also has operations in Colombia and Peru.
Guillermo Tagle, partner and CEO of IMTrust, tells Euromoney that the decision to form the new pan-Andean financial institution replicates its previous strategy to enter into the Colombian and Peruvian markets organically.
"We were in the process of opening and creating a full service office in Peru since last year – one of our partners went to live in Lima, and we were beginning to do the same thing in Bogotá, and then we got the proposal from Credicorp," says Tagle.
"Each of us [IMTrust, Banco de Crédito del Perú and Correval] wanted to be a regional player and now together we will become a very strong, independent institution in this part of the world, and will provide financial services to any investor or corporation that wants to do business in our countries."
The due-diligence process is expected to be complete by the end of July. No name for the new organization has yet been decided.
|Manuel Bulnes, partner and head of capital markets at Chilean investment bank LarrainVial|
The creation of Mila, which harmonizes electronic trading between the Chilean, Peruvian and Colombian stock exchanges, is cited as an impetus for the regional consolidation. Although trading on the platform has been growing slowly, bankers in the region say the wider effects of the tie-up are substantial. "Mila is a concept today rather than a trading reality but the integration of the capital markets of Colombia, Peru and Chile make a lot of sense because corporates in the region are also growing in the region," says Manuel Bulnes, partner and head of capital markets at Chilean investment bank LarrainVial. Bulnes adds that buy-side firms are also structuring themselves with single units covering the three markets.
"What Banco de Crédito del Perú is doing is very logical," says Jorge Tabares, co-head of investment banking at Bolsa y Renta, a leading Colombian stockbroker that added an investment banking division just six months ago. "BTG buying Celfin was also very sensible. You need local capability, local relationships and knowledge, and you need people in the individual countries. For example, it’s not easy for us to go to Peru and sell there."
Bolsa y Renta’s investment banking division has had some early successes in M&A, winning four mandates, and expects to be able to build equity capital markets (ECM) business as the market grows. It is assessing its options with regards to entering the Peruvian and Chilean markets.
"We are approached every day by someone who wants to establish a relationship," says Tabares. "Some want to buy us, or buy a stake in the firm, and others want to discuss an alliance. We are open to all ideas. At some point, something is going to happen – someone will come with the specific deal [that is right for us]."
Although the firm is open to proposals, regional partners are more attractive to local independents than global institutions, according to Bolsa y Renta’s other co-head of investment banking, Felipe Perez. "We would prefer to be an important part of [any new] company that wants to have a presence in Colombia," he says. "We don’t want to be [viewed as] somewhere in the middle of the jungle – we want to be an important part of the whole."
Corredores Asociados is one of the largest ECM firms in Colombia, and Juan de Bedout, partner and head of investment banking and capital markets, says expectations of strong growth in equity issuances is prompting interest from foreign firms.
"This is a very dynamic moment in our market," he says. "I am sure there will be rearrangement." The firm has strong domestic growth plans and cherishes its independence, "which has worked very well for us", but De Bedout admits partners could bring advantages.
"It would be nice to have balance sheet for certain deals. We haven’t seen those types of deals but we know that, as the market grows, balance sheet becomes more important."
Juan Andrés Camus Camus, president of Celfin, says further pan-Andean consolidation is inevitable. "The concept of becoming more regional than country specific is something that is getting attraction in all institutions," he says. "Most of the other Chilean institutions are really trying to expand their businesses into Peru and Colombia."