Billionaire’s Aval Drops on U.S. Share Sale Plan: Bogota Mover

Grupo Aval Acciones y Valores SA, the Colombian banking group controlled by billionaire Luis Carlos Sarmiento Angulo, tumbled from a record high after announcing a plan to sell shares in the U.S.

The company’s shares fell 0.7 percent to 1,420 pesos as of 12:22 p.m. in Bogota, after rising yesterday to 1,430 pesos, the highest since they first started trading in May 2011. Today’s drop was the second-worst performance on the benchmark Colombian Colcap index, which was little changed. Trading volume was five times the three-month daily average.

Aval may offer as much as $100 million of American depositary receipts, according to a filing today with the U.S. Securities and Exchange Commission. The estimated maximum is a placeholder figure used to calculate registration fees and may change.

Proceeds may be used to strengthen the group’s four banks and “support their organic and inorganic growth,” investor relations officer Tatiana Uribe said today in a telephone interview. The amount of the sale hasn’t been set and is subject to shareholder approval, she said.

Since the market “does not have further information about timing, amount and use of proceeds, we expect volatility” in the shares, Credicorp Capital’s Colombian brokerage unit wrote today in a report. The company may use the funds to acquire shares in the companies it controls or to make new acquisitions, according to the report.

Best Timing

Grupo Aval is Colombia’s largest banking group by assets, including subsidiaries Banco de Bogota SA, the country’s second largest bank, and Banco de Occidente SA, Banco Popular SA and Banco Comercial AV Villas SA, according to the filing.

Chief Executive Officer Luis Carlos Sarmiento Gutierrez, 51, said in September that the Bogota-based company was “waiting for the best timing” for an overseas sale. “We’re ready and have been ready for more than a year to issue ADRs,” he said at the time. Sarmiento Gutierrez is the son of Sarmiento Angulo, 80, who is the founder and chairman.

Banco de Bogota has gained 21 percent and Banco de Occidente has advanced 23 percent since Grupo Aval said its board approved buying shares in the lenders in an April 11 filing, without saying how many it would seek to buy. Aval’s own shares have jumped 13 percent during that period.

Aval’s Uribe said the company considered the banks’ share valuations “attractive.” She said she didn’t know how many shares Aval had bought.

Banco de Bogota, which acquired Central American lender BAC Credomatic in 2010, will keep its focus on that region for additional acquisitions, the lender’s chief executive officer Alejandro Figueroa said in a May 27 interview.

“If we see opportunities in Central America, where we’re already operating, then that would get priority, but we have to wait for opportunities to show up,” he said.

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