--Generali to exit Mexican pension, insurance business

--Banorte to pay Italian firm $857.5 million for control of JVs

--Acquisition spree continues for Mexico's third-biggest financial group

By Amy Guthrie

MEXICO CITY--Mexico's third-largest bank, Grupo Financiero Banorte SAB (GFNORTE.MX, GBOOY), demonstrated a hunger for more acquisitions Tuesday with plans to buy out minority stakes in pension and insurance joint ventures from Italian partner Assicurazioni Generali (G.MI) for $857.5 million.

Banorte said in a statement that it reached the decision to purchase Generali's 49% share in the joint ventures because it felt that the existing structure doesn't allow those businesses to reach their full growth potential. Banorte said it is analyzing alternatives to finance the acquisition, and that the deal still requires regulatory approval.

In a separate statement, Generali--which previously announced a desire to exit some of its noncore investments--said it will strengthen its liquidity and capital positions via the sale, which is seen producing a capital gain of around 500 million euros for the Italian insurer.

Generali Chief Executive Mario Greco said the minority position "was no longer consistent with Generali's current strategy to manage its invested capital actively." He added that Latin America, and in particular Brazil, remains an interesting market for the company.

Banorte, which two decades ago was a small, regional bank, has grown exponentially via acquisitions. The financial group has more than tripled its assets under management over the past five years, to roughly $140 billion, and currently it co-manages Mexico's biggest Afore pension fund. The bank has 22 million clients, catering to a fifth of the Mexican population, and 27,000 employees.

Several analysts have expressed a desire to see Banorte put the brakes on its spending spree since the bank closed earlier this year on its joint purchase of Banco Bilbao Vizcaya Argentaria SA's (BBVA) Mexican pension-fund business. That acquisition cost Banorte around $800 million.

In an April interview, Banorte Chief Executive Alejandro Valenzuela said the bank would continue to study opportunities for growth and consolidation, although it also sees a need to pace itself.

As of the end of April, Banorte's joint ventures with Generali had combined excess capital of $79.5 million. Including that capital, the bank said it has agreed to pay a valuation of 16.5 times 2012 profit for Generali's minority stake in the insurance joint venture and 4.9 times 2012 book value for the pension stake.

Banorte said that the Banorte Generali pension fund accounted for 4.8% of Banorte's total assets in the first quarter, during which the unit showed a net profit of less than $4 million, or 1.6% of the financial group's total quarterly profit. The Banorte Generali insurance business offers life, car, home and medical coverage policies, ranking ninth in the Mexican market for policies sold, the bank said. The insurance joint venture represented 1.9% of Banorte's first-quarter assets and contributed 9% of the group's quarterly profit, or about $22 million.

--Manuela Mesco contributed to this article.

Write to Amy Guthrie at amy.guthrie@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires