Prudential To Pay $34 Million For 18% Of Chile Real-Estate Firm Paz

PLA Chile, a real-estate investment fund managed by U.S. firm Prudential Financial Inc. (PRU), signed an agreement Friday with shareholders of Chilean real-estate developer Paz Corp. (PAZ.SN) to buy new shares totaling 18.3 billion Chilean pesos ($34.3 million), or 18% of the company.

Four investment companies known as Familia Paz, which currently control 59.2% of Paz Corp., have agreed to approve the capital increase in a shareholders meeting, Paz Corp. said in a statement.

Familia Paz will retain control of the company with a 42% stake, Prudential's PLA Residential Fund III Chile LP, known as PLA Chile, will own 18%, and minority shareholders will hold the remaining shares.

The capital increase is designed to strengthen the Chilean company's investment plan, Paz Corp. said in a statement.

This is Prudential's first investment in Chile, and the deal is pending a due diligence study of Paz and its subsidiaries, the statement said.

"Prudential is a strategic investor given the size of the fund and their expertise... it's too early to say what specific investment opportunities this will create," said a person close to the operation.

Paz will issue 91.3 million new shares, and PLA Chile will subscribe 100% of the shares worth CLP200.00 each.

Paz Corp.'s shares were trading at CLP250.00 midday Monday, down 3% from Friday as Chile's blue-chip stock index, the Ipsa, tumbled 2%, tracking losses in the U.S. market. Paz has traded at a high of CLP314.99 and a low of CLP109.00 in the last 52 weeks.

BanChile and Citigroup Global Markets are advising Prudential in the operation.

Paz has 40 years experience developing real-estate projects in Chile, and it currently has 64 projects in development in Santiago and other parts of the country.

-By Julian Dowling, Dow Jones Newswires; 56-2-820-4241; [e-mail]