ING Groep NV, the biggest Dutch financial-services company, agreed to sell part of its 36.5 percent stake in Sul America SA to the Brazilian insurer’s founding family as it prepares for a full exit.
After the transaction with the Larragoiti family, who founded the insurer more than a century ago, ING will have a direct stake of about 30 percent, the Amsterdam-based company said in a statement today without giving details of the deal. The bank is free to sell its remaining shares starting today, said Ingeborg Klunder, a spokeswoman for ING.
ING is under European Union orders to divest global insurance and investment-management operations after receiving a government bailout in 2008. The firm sold most of its Latin American life and pension business to Grupo de Inversiones Suramericana for about 2.7 billion euros ($3.5 billion) in 2011, leaving it with the Sul America stake. Today’s transaction gives the Dutch company more flexibility to dispose of the shares before the EU’s deadline of the end of 2016.
ING said the deal won’t have a material impact on earnings and is expected to be completed in the second half of the year. Its remaining stake in Rio de Janeiro-based Sul America is worth 620 million euros, according to yesterday’s closing price.
Sul America fell 3.1 percent to 18.87 reais in Sao Paulo, the biggest drop since Jan. 9. That compares with a 1.6 percent gain to 6.16 euros for ING in Amsterdam.
The Brazilian insurance industry will keep growing in coming years as wages rise, Sul America Chairman Patrick de Larragoiti Lucas said in a telephone interview today, adding that the company will continue looking at acquisition possibilities.
“Insurance is one of the most dynamic industries of the Brazilian economy,” he said. “Brazil’s insurance market rose about 15 percent in 2012 from a year earlier, while gross domestic growth posted a modest expansion.”
Under the agreement, the Larragoiti family will increase its stake in Sul America to 31.9 percent from 24.8 percent and will hold more than 50 percent of the insurer’s voting shares, Larragoiti Lucas said on a conference call earlier today.
“The Larragoiti family doesn’t plan to boost its stake in Sul America” beyond today’s agreement, he said in the interview, adding that the family won’t extend the offer for ING to minorities shareholders because control of Sul America didn’t change with the transaction.