Grupo Sura's ING Buy Seen Making Colombia Firm Regional Powerhouse

Colombian holding company Grupo de Inversiones Suramericana (GIVSY, GRUPOSURA.BO) becomes a regional leader in its core pension and insurance sectors with its upcoming $3.5 billion purchase of ING Groep's (ING, INGA.AE) Latin American pension business, Colombia's largest brokerage InterBolsa said in a report Friday.

Grupo Sura, as the conglomerate is known, is expected to complete by the end of the year its purchase of ING's regional assets. Analysts initially viewed the deal with skepticism due to the large price tag, but the entrance of co-investors that are footing more than a quarter of the bill has made the transaction more palatable.

The conglomerate, part of the powerful Antioquean Syndicate, has always been a giant within Colombia. With its investments in Colombia's largest lender Bancolombia (BCOLOMBIA.BO), insurance firm Suramericana and top food producer Grupo Nutresa (NUTRESA.BO) and others, Grupo Sura accounts for nearly 6.4% of Colombia's gross domestic product and generates 110,000 jobs, the brokerage says. The ING buy is its boldest move outside Colombia's borders, giving it a strong hold in Chile, Mexico, Peru and Uruguay.

"This transaction represents a huge shift for the company going forward," InterBolsa said. "By becoming a regional player in the pension and insurance businesses, there is a large space for value generation to its shareholders base."

The broker recommends buying stock in the company, saying it has a 41% upside potential for next year. It closed 2.7% higher Thursday at COP31,340. For the year, Grupo Sura's shares are down 16%, compared with a 14% decline in the Colombian Stock Exchange's benchmark Colcap index.

InterBolsa notes that investors from developed economies represent a potentially large investment pool in Grupo Sura stock and its powerful role in pension and insurance fields.

"The current debt crisis in developed economies, and its impact on international corporations has enhanced the interest for investors to diversify their positions in emerging markets," it says. "We consider that Grupo Sura is an appealing investment alternative to get exposure to financial services different than banking in a region that will grow more than developed economies."

Among the co-investors in Grupo Sura's purchase of ING's Latin American assets are the World Bank's investment arm, as well as local financial firm Grupo Bolivar and Bancolombia. UBS AG (UBS) last week purchased 30 million shares, a $505 million investment, in Grupo Sura as part of the firm's recent stock placement.

-By Dan Molinski, Dow Jones Newswires; 57-310-867-6542; [e-mail]