Principal Financial Group has agreed to buy Chilean pension company AFP Cuprum for about $1.51 billion to expand in emerging markets, the U.S. insurer and asset manager said on Monday.
According to the deal, Principal Financial will use a public tender to acquire 63 percent of the company held by financial groups Empresas Penta and Inversiones Banpenta, along with the remaining 37 percent. Cuprum currently has about $32.1 billion in assets under management.
"This acquisition continues our effort to find targeted, strategic acquisitions that strengthen our competitive position in the most attractive emerging retirement and long-term savings markets," said Larry Zimpleman, Principal Financial chairman, president and chief executive.
"Cuprum represents the sixth such transaction in the past two years and adds meaningfully to our fee-based earnings, giving us continued financial flexibility."
Chile's private pension fund system has attracted investor attention due to high returns and robust local economic growth.
Medellin, Colombia-based Grupo Sura paid more than $3.5 billion last year for the regional assets of ING Groep NV , including Chilean pension fund AFP Capital.
Spain's No.2 bank BBVA may sell its Latin American pension fund businesses, joining the ranks of banks looking to shed operations outside their main markets to reduce risks and meet tougher capital rules, it said in May.
Iowa-based Principal Financial said in a statement it expected the transaction to close in the first quarter 2013 pending Chilean regulatory approval and be immediately accretive to earnings per share and return on equity.