Grupo Security Closes on Purchase of Cruz Del Sur
Through this transaction, Grupo Security will substantially increase its size and position itself among the country's most important financial groups.
This morning Grupo Security completed the acquisition of the financial businesses operating under the Cruz del Sur brand, adding one of the market's most prestigious companies to the group, as was reported today to the Securities and Insurance Supervisor after signing the deal and making a payment of UF 6,273,407, equivalent to Ch$143,364 million.
The CEO of Grupo Security, Renato Peñafiel, commented that “the integration of the Cruz del Sur companies will enable us to further strengthen our product and service proposal for our customers since both organizations share a common culture and values, including professional excellence, solid principles of ethics and transparency and straightforward, customized service.”
Grupo Security secured a loan for Ch$70,000 million from Banco de Crédito e Inversiones, which will be paid by issuing bearer bonds targeted towards the general market for up to UF 3 million with a maximum maturity of 25 years. In addition, Security will carry out a capital increase of 377.7 million shares at Ch$190 per share to raise Ch$71,771 million. The preferential option period for this capital increase will begin in June. The difference will be paid from cash reserves. This arrangement meets the objective of financing the Cruz del Sur acquisition with a combination of debt and capital, as announced at and approved by shareholders at the extraordinary shareholders' meeting held in April.
On the matter, Peñafiel commented that “this loan from BCI is a new show of confidence for Grupo Security's track record as a sound, diversified financial group, as well as strong support for the opportunities made available to us by this acquisition, which will earn us a new leadership position in attractive, growing business segments within our industry.”
Based on the financial statements (FECU format) filed with the SVS, the Group's profit for the last twelve months ending March 30, 2013, totals Ch$52,619 million, equivalent to approximately US$ 111 million, which confirms the track record of growth that the company has maintained over the past few years.
This increase in business scale involves important commercial and operating synergies for Grupo Security, which will positively impact the company's future earnings. With the integration of Cruz del Sur, Grupo Security will rank third among local life insurance companies measured by direct premiums in non-retirement insurance with 8.6% of the market, fourth in individual insurance policies with 11.2% and second in the insurance industry in terms of total direct premiums with 8.6%, all based on 2012 data. In terms of asset management, Security will expand its AUM by 50%, ranking fourth among local fund managers.
Baker & McKenzie and JP Morgan advised on the deal.