On March 30, BHI (BAC Holding International) was supposed to start trading on the Colombian Stock Exchange (BVC) but the Financial Superintendence suspended its entry as a new share since it received a request for a takeover bid.
The price offered for each share is $293 and in the public offer it is intended to acquire between 5% and 15% of the total shares of BHI. Days later the BVC announced that Rendifin, a vehicle of the controlling group of Grupo Aval and Banco de Bogotá, presented the takeover bid.
(Nubank obtains credit to expand its operation in Mexico and Colombia).
This company owns 3.59% in Grupo Aval, 3.45% in Banco de Bogotá, and implicitly close to 4.4% in the BHI.
According to Daniel Mora, a specialist in equities at Credicorp Capital, “at first glance, this takeover bid seemed like an additional step for the spin-off. In fact, Grupo Aval and Banco de Bogotá they declared that the fractions of BHI could not be negotiated, and that these remnants could be liquidated among the shareholders or reacquired by the respective company”.
The analyst says that it was believed that it was also a mechanism to get the shares of those investors who had ADR (traded on the New York Stock Exchange) of Grupo Aval and could not receive those shares from BHI.
(In 2021 another 25,000 shareholders arrived at firms on the stock exchange).
But according to estimates, assuming that each shareholder of Banco de Bogotá and each owner of an Aval share in the ADR program has to negotiate their exit from BHI, the number of shares to be negotiated would reach less than 1% of the total shares.
Thus, according to the analysis of Credicorp Capital, the takeover bid should be considered as a liquidity mechanism for the shareholders who received BHI shares. The price offered in the bid is close to the book value assuming the US$3.25 billion valuation provided by Aval and Bogotá.
Therefore, the takeover bid would be an opportunity for those shareholders who do not want to have exposure to Central America.
For their part, says the analysis by Credicorp Capital, the shareholders that remain invested in BHI would find themselves with an asset with a significant decrease in float.
The firm estimates the float of BHI close to 20% of the total shares, but if the total amount of the bid is successfully closed (15%), the float could fall to about 5% of the total shares and the latter limits the possibility of BHI entering different indices such as the MSCI Colcap (with a minimum float requirement of 15%).
Taking into account the valuation of BHI that Grupo Aval and Bogotá provided of US$3.25 billion, the total stake to be acquired should be worth between US$162.5 million and US$487.5 million.
Credicorp Capital says this does not take into account the price provided in the takeover bid, as without the exact number of shares, it is not possible to determine a price per BHI share to compare with the offer price provided.
Thus, the firm estimates that the total number of shares could reach 43,235 million.
Therefore, with the prices of the shares of Aval and Bogotá and considering the price offered in the bid by BHI, the firm Credicortp Capital highlights that the minority shareholders have already observed an increase in the value of the independent shares when compared to the Grupo Aval and Banco de Bogotá share prices before the spin-off.
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