Friday, June 14, 2024

Banca Mifel and Grupo México remain in the running to buy Banamex

The field of potential buyers of Citibanamex has narrowed to two after the Carlos Slim-owned financial company Inbursa pulled out of the contest last week.

Banca Mifel, a Mexican bank, and Grupo México, a conglomerate owned by billionaire businessman Germán Larrea, are still vying to buy Citigroup’s Mexican retail bank — Mexico’s fourth largest bank by assets with a market share of 11.9%, according to the news agency Reuters.

Mifel has found investors including Apollo Global Management and the Abu Dhabi Investment Authority (ADIA) to fund its bid, Reuters reported Sunday, citing two sources familiar with the matter.

Apollo is a New York-based private equity firm while ADIA is a sovereign wealth fund owned by the Emirate of Abu Dhabi, part of the United Arab Emirates.

One source told Reuters that more investors could back Mifel’s bid to buy Citibanamex (also known as Banamex), although it already has sufficient funding to support its proposal. Both sources said that Mifel and Grupo México are conducting additional due diligence on the bank, which was acquired by Citigroup in 2001.

Meanwhile, the Bloomberg news agency reported Monday that a group of investors led by Mifel and backed by Apollo are in talks with banks for about US $2 billion of financing for their bid to buy Banamex.

Citigroup, a U.S.-owned corporation, announced in January it would sell Banamex, and President López Obrador subsequently said he wanted the bank to be “Mexicanized.”

Reuters reported that acquiring Banamex would “transform” Mifel as its current market share is less than 1%, according to the National Banking and Securities Commission.

Its capacity to be competitive in the contest to buy the bank had been questioned by some analysts due to the immense wealth of Larrea, who has mining, transport, infrastructure and entertainment interests, and Slim, Mexico’s richest person and owner of the Grupo Carso conglomerate.

While Grupo México could still outbid Mifel, Grupo Financiero Inbursa said in a filing to the Mexican Stock Exchange last and Wednesday that it would no longer pursue the acquisition.

“Following submission of a non-binding proposal for the businesses in question, the parties mutually agreed that Inbursa will not be continuing to the next stages of the process,” it said.

According to Bloomberg, market watchers had seen Slim as a long shot to pay top dollar, given his history of disciplined transactions.”

An offer by Spanish bank Santander was rejected in July, while Mexico’s Banorte left the race in October.

Citigroup, which intends to purchase Deutsche Bank’s Mexican banking license to maintain its corporate investment and private banking presence in Mexico, said last Wednesday that it was in active dialogue with potential buyers” and remained “committed to pursuing a path that maximizes value for our stakeholders.”

Pablo Riveroll, a fund manager at Schroder Investment Management Ltd in London, told Bloomberg that the decline in the number of bidders increases the chances that Citigroup will receive low-ball offers for Banamex.

If the offers are disappointing, “either Banamex gets sold relatively cheaply, because Citi has to sell and they already decided that, or they decide to cancel the sale,” he said.   

With reports from Reuters and Bloomberg 

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