Citigroup Strikes Deals to Sell Banamex Stakes
Citigroup Inc., a multinational investment bank and financial services corporation, continues to strengthen its operation in Mexico. Recently, the bank has sealed agreements to offload an additional 24% of its Mexican retail bank, Grupo Financiero Banamex, for an estimated $2.5 billion. The move follows the company’s strategic plan to streamline its global operations and comes as Mexican billionaire Fernando Chico Pardo assumes control.
Diverse Investors Acquire Stake in Banamex
The group of investors who have agreed to buy into Banamex encompasses private equity firms, a bank, and a sovereign wealth fund. They will collectively take up 499 million shares of the banking group for approximately 43 billion pesos ($2.5 billion). The transactions, however, remain contingent on regulatory approval and are projected to finalize within the year.
Citigroup revealed that the new investors include funds managed by Blackstone Inc., General Atlantic, Brazilian bank Banco BTG Pactual SA, and Afore Sura, the Mexican pension fund of Colombia’s Sura Asset Management. Further, insurance firm Chubb Ltd, funds from Liberty Strategic Capital, and Qatar Investment Authority have acquired equity stakes.
Ernesto Torres Cantu, head of international at Citigroup, expressed confidence in the new investors, stating, “Their investment is a further endorsement of Banamex’s long-term strategy, market leadership and growth prospects, and their commitment solidifies Banamex’s foundational position within Mexico’s banking system.”
Focus on Mexican Market
The significant movement of shares comes as Citigroup, under the leadership of CEO Jane Fraser, rolls back its retail business in Mexico. The financial institution previously sold 25% of Banamex to billionaire Fernando Chico Pardo for 42 billion pesos ($2.43 billion). The latest stakes were sold at 0.85 times book value, slightly above the 0.8 times paid by Chico Pardo.
Chico Pardo has confirmed his intent to spearhead Banamex along with his sons. The Mexican billionaire played a significant role in the selection of the new investors, according to Citigroup. The bank, in its statement, clarified that it does not anticipate selling any more Banamex stakes this year.
Future Plans for Banamex
Citigroup has been contemplating an initial public offering (IPO) for Banamex as part of its exit strategy from the operation. The plan includes selling smaller stakes ahead of any IPO. The timeline for this offering will depend on the market window and regulatory approvals.
With the latest deals, Citigroup is set to reduce its ownership in the business, transferring stakes to major private equity firms, a bank, and prominent Mexican executives. The co-CEOs of Grupo Televisa SAB, Alfonso de Angoitia and Bernardo Gomez, are among the new investors.
As part of its global restructuring, Citigroup has been winding down or selling retail arms worldwide. However, the bank plans to retain a corporate banking unit and brokerage in Mexico. This strategy aligns with Citigroup’s goal of simplifying its operations while continuing to provide high-quality services to its clients.
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