ILC Surges on Deal to Buy Stake From Chilean Billionaire

Inversiones La Construccion SA (ILC), which controls Chile’s second-largest pension fund manager, posted a record rally after agreeing to buy the insurance businesses of billionaire Alvaro Saieh.

Shares of the company also known as ILC jumped 5.2 percent to 7,100 pesos at 3:26 p.m. in Santiago, the biggest gain on a closing basis since its listing in July 2012. The IPSA benchmark index advanced 2.9 percent, the most since October 2011.

La Construccion, which owns a controlling stake in AFP Habitat SA, the largest pension fund manager in Chile by assets under management after AFP Provida SA, agreed to pay $170 million in cash, plus assumption of debt, for a 67 percent stake in Corp Group Vida Chile SA, the insurance company owned by Saieh, according to a statement posted today on the website of Chile’s securities regulator.

The deal “will give ILC a presence in the annuities market and may fit well with its other businesses,” Jason Barratt, an analyst at brokerage BICE Inversiones in Santiago, said in a phone interview.

Saieh has agreed to provide $300 million by year-end for SMU SA, a retailer he controls. It recorded a record loss in the second quarter and announced in July a debt-covenant breach related to accounting errors. SMU is also selling some assets to pay debt and fund operations.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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