Mexican investors including the billionaire owner of Grupo Financiero Ve Por Mas will invest 450 million euros ($621 million) in Banco Popular Espanol SA (POP) as Spanish banks tap Latin American funds to bolster capital.
The family of Antonio del Valle, which owns Ve Por Mas, and other Mexican investors will acquire a 6 percent stake in Popular, the Madrid-based bank said in an e-mailed statement today. Popular in turn will buy 24.9 percent of Ve Por Mas via a 97.1 million-euro share sale as the two groups seal an alliance aimed at winning more small and medium-sized business customers in Mexico and Latin America, the bank said.
Popular joins Spanish banks that have tapped Latin American investors for capital to bolster balance sheets after a five-year economic slump and ahead of European bank regulators’ stress tests. Sabadell, Spain-based Banco Sabadell SA said in September it attracted foreign investors including Colombian billionaire Jaime Gilinski as it sold 1.38 billion euros in stock.
“They’re taking advantage of having a strategic partner come in, to help them get more comfortable for the stress tests,” said Carlos Joaquim Peixoto, an analyst at Banco BPI SA in Porto, Portugal, who rates Popular “neutral.” “It’s almost a cut-and-paste of the transaction Sabadell did.”
Popular will issue 113.9 million new shares at 3.95 euros apiece, a 5 percent discount from yesterday’s close, the bank said. Its shares fell 1.4 percent to 4.10 euros at close in Madrid.
The transaction will boost Popular’s core capital ratio under Basel 2.5 criteria to 12.3 percent from 11.76 percent, the bank said. The alliance is also aimed at helping Mexico City-based Ve Por Mas triple its size in five years.
“This also gives Popular a foothold in Mexico and perhaps an option to grow,” said Peixoto.
Popular was forced to raise 2.5 billion euros a year ago to plug a capital hole revealed through regulatory exams designed to gauge how well it would weather periods of economic or financial-market stress. The bank is targeting annual earnings of 1.4 billion euros by next year as it rebuilds profit after a balance-sheet cleanup that caused a 2.46 billion-euro loss in 2012.
Del Valle, who was chairman of the Mexican bank Bital before it was bought by HSBC Holdings Plc (HSBA) in 2002, has a net worth valued at $5.4 billion, making him Mexico’s seventh-richest person, according to data compiled by Bloomberg.
In addition to closely-held Ve Por Mas, his family has investments in chemical manufacturer Mexichem SAB (MEXCHEM*), chemicals distributor Grupo Pochteca SAB (POCHTECB), building materials company called Elementia SA and oil-rig company Santa Maria Offshore Ltd.