Grupo Aval’s Luis Carlos Sarmiento Angulo. Photo credit: AFP/Getty Images/Yuri Cortez
Luis Carlos Sarmiento Angulo, Colombia’s richest man and owner of the country’s largest financial conglomerate, Grupo Aval, seems determined to conquer Central America. With his most recent deal — Grupo Aval is set to acquire BBVA’s Panama business for $490 million in cash, a price that takes into account a $140 million dividend the current owners will pay themselves before the sale — he provides even more evidence on that front. The transaction, expected to be closed by November 30, comes less than a month after Sarmiento’s company announced it was buying Grupo Financiero Reformador of Guatemala for $411 million through its Central America arm, BAC-Credomatic. Both acquisitions are subject to regulatory approval.
Grupo Aval is not alone among its peers in its expansionism north. Colombian banks are attracted by the bright prospects for many Central American economies, especially Panama’s, which is emerging as a regional commercial hub with a growing economy (the IMF forecasts 9% GDP growth this year) and a growing middle class willing to spend.
There is also opportunity. European banks such as Spain’s BBVA (which in April also sold to Grupo Aval a 99.9% stake in its Colombian pension fund unit, Horizonte, for $541.4 million) are losing the influence they once held in the region. Needing to shore up their businesses and balance sheets at home, European banks are shutting down operations elsewhere and selling assets to raise capital.
In February, London-based HSBC, the other large foreign bank in the region, sold its assets in Panama for $2.1 billion to Bancolombia, Colombia’s largest bank by assets and one of Aval’s main competitors. The sale, expected to close during the third quarter of 2013, includes HSBC’s local brokerage, fiduciary services unit, banking business and insurance company.
Last year, Bogotá-based Banco Davivienda agreed to acquire HSBC’s assets in Costa Rica, El Salvador and Honduras for $801 million. Further south, Banco GNB Sudameris agreed to buy HSBC’s units in Colombia, Peru, Paraguay and Uruguay for $400 million.
Nor is it just Europe’s banks that are retreating from the region. In April, Spanish telecoms group Telefonica agreed to sell a 40% stake in its Central American assets to Guatemala’s Corporacion Multi Inversiones in order to raise $500 million to pare debt.
Though Carlos Sarmiento, whose personal fortune is estimated at $13.9 billion according to Forbes, takes a conservative approach to business, the rapidity of Grupo Aval’s expansion is impressive. Barely three years ago, its acquisition of BAC-Credomatic from GE Capital Global Banking for $1.9 billion was the largest foreign acquisition ever by a Colombian company. Since then it has more than doubled its total assets: $72.2 billion, as of December 2012, from $31.5 billion in July 2010. In June, it posted a non-consolidated $600 million (1.15 trillion peso) net profit for January-May, up 21% from the same period in 2012. As its internationalization continues to pick up speed so will these juicy numbers.
