2 June 2006, Buenos Aires - Advent International, the global private equity firm, today announced that it has completed the acquisition of Nuevo Banco Comercial S.A. (NBC), Uruguay’s largest commercial bank, from the Uruguayan government. The transaction, which has been approved by the Central Bank of Uruguay, is valued at US$167 million.
NBC is Advent’s seventh investment in the financial services sector in Latin America and follows its October 2005 acquisition of Hipotecaria Casa Mexicana, a specialized mortgage lending institution in Mexico.
As the lead investor in the NBC transaction, Advent arranged and is managing a syndicate of co-investors, including Morgan Stanley Alternative Investment Partners and two of Europe’s largest development banks, the Netherlands Development Finance Company (FMO) and DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH.
NBC was formed by the Uruguayan government in December 2002 through the acquisition of assets from three banks that had been suspended during the country’s 2001–2002 banking crisis: Banco Comercial, Banco de Montevideo and Banco Caja Obrera. The structure of the acquisition process enabled NBC to select the best assets from each bank, including the highest-quality loan portfolios, branches, staff and infrastructure.
Today, NBC has close to US$1 billion in assets and a net worth of US$181 million. The company provides a complete range of banking services, including corporate and personal loans, credit cards, car loans, export and import finance, to over 200,000 retail and corporate customers. NBC is the largest among private banks in performing loans and net worth and second in total assets and liabilities. It is also the leading credit-card issuer in Uruguay, with approximately 35% market share and some 108,000 active accounts.
“NBC is an excellent, well-managed institution, having been formed by combining the best assets of three of Uruguay’s largest banks,” said Ernest Bachrach, Chief Executive of Advent’s Latin American operations. “The bank has a solid balance sheet and excellent prospects for growth. We look forward to working with management to develop NBC’s product lines, improve profitability and continue driving loan portfolio growth.”
“NBC’s partnership with international, long-term investors of this caliber is great news for our customers,” said Jose Fuentes, CEO of NBC. “The investors’ world-class reputation and strong commitment to the region provides us with an exceptional platform from which we can grow. In addition, Advent’s international experience and expertise will help us enhance the services and products to our customers in Uruguay and abroad.”
Since the restructuring of Uruguay’s banking sector in 2002, there has been significant consolidation. The sector currently comprises two state-owned banks, Banco de la Republica Oriental del Uruguay (BROU) and Banco Hipotecario del Uruguay (BHU), 13 private banks, including NBC, and a number of credit cooperatives. NBC has the most extensive branch network among private banks and is the only one with a truly national reach. In many cities, it is the sole bank alongside BROU.
The Uruguayan economy has recovered strongly after a long recession, with GDP growing over 12% in 2004 and 6.6% in 2005. Historically, the financial services sector, particularly banking, has grown 1.5 times faster than the economy. Assuming average GDP growth of 3% a year until 2010, the demand for financial and banking services in the next four years is expected to be substantial. The surge in demand combined with reduced competition should provide significant growth opportunities for NBC.
Advent International has been investing in the financial services sector for two decades and has completed over 20 investments worldwide. In addition to NBC and Hipotecaria Casa Mexicana, Latin American investments include Consultoría Internacional, a Mexican provider of currency exchange services; DolEx Dollar Express, an electronic money transfer firm, acquired by Global Payments (NYSE: GPN); CSU CardSystem, Brazil’s largest independent credit card administrator; J. Malucelli Seguradora, the No. 1 surety bond provider in Brazil; and Proservvi, Brazil’s leading provider of back-office processing services for financial institutions.
Advent International is the leading buyout firm in Latin America with an unrivalled 10-year history of investing in the region. To date the firm has invested in 30 Latin American companies with a combined enterprise value exceeding $3 billion. Advent’s Latin American Private Equity Fund III, which closed on $375 million last year, is the largest to target the region in the past five years. In February 2006, Advent was voted Latin American Private Equity Firm of the Year in a reader poll sponsored by Private Equity International magazine and PrivateEquityOnline.com.