(RTT News) Grupo Financiero Santander Mexico,said that its parent company Spanish bank Banco Santander has agreed to sell a 50% stake in its custody business in Spain, Mexico and Brazil to a group led by private equity firm Warburg Pincus.
Santander will continue to own the remaining 50 percent stake in its custody business. The transaction values Santander’s custody operations in these three countries at 975 million euros, or $1.33 billion, and will generate a net capital gain for the Santander Group of about 410 million euros, or $558.8 million, which will be used by the company to strengthen its balance sheet.
The buyers’ group for Santander’s custody business includes FINESP Holdings II B.V, an affiliate of Warburg Pincus, and Singapore’s state investment firm Temasek Holdings Private Limited. The transaction, which is conditional upon legal and regulatory approvals, is expected to close in the fourth quarter of 2014.
Santander is the largest bank in the euro zone by market capitalization and also the largest financial group in Spain and Latin America. The company also has significant positions in the U.K., Portugal, Germany, Poland and the northeast U.S. Santander is a custody provider in Spain, Brazil and Mexico, with 738 billion euros in assets under custody.
Santander said that following the deal, it will focus on enhancing products and services provided to its customers through a bigger investment in its technology platform.
Javier Marín, Chief Executive Officer of Banco Santander, said, “With this alliance, Santander will significantly increase its fund administration, depositary and custody business in markets where we are already leading providers. The transaction will enable us to increase and improve the products and services we offer our clients, with a higher value-added proposition adapted to their needs.”
New York-based Warburg Pincus is a private equity firm focused on growth investing with more than $37 billion assets under management. Founded in 1966, the company has raised 13 private equity funds that have invested more than $48 billion in over 700 companies in more than 35 countries.
Temasek owned a $215 billion portfolio as at March 31, 2013. The company has 71 percent of its underlying assets in Asia, including Singapore, and 25 percent in the mature economies of North America, Europe, Australia & New Zealand. About 2 percent of the portfolio is held in Latin America.
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