Banco Santander has entered into a definitive agreement with an affiliate of Warburg Pincus, a global private equity firm focused on growth investing, to grow its custody business.
Under the terms of the agreement, which is conditional upon legal and regulatory approvals, the group which will also include Singapore’s sovereign wealth fund investor Temasek will acquire a 50% stake in Santander’s current custody operations in Spain, Mexico and Brazil. The remaining 50% will be owned by Santander. The transaction is expected to close in the fourth quarter of 2014.
Santander provides custody in Spain, Brazil and Mexico, with €738 billion in assets under custody. The transaction values Santander’s custody operations in these countries at €975 million and will generate a net capital gain for the Santander Group of approximately €410 million, which will be used to strengthen the balance sheet.
Santander says it will focus on enhancing the products and services provided to its customers through greater investment in its technology platform and team.
New York-headquartered Warburg Pincus has more than $37 billion assets under management. The firm has previously partnered with Banco Santander to jointly build best-in-class businesses. Current and past financial sector investments include Kotak Mahindra Bank, Mellon Bank, Bancshares, Santander Consumer U.S.A. and Santander Asset Management.
Temasek owns a $215 billion portfolio as at 31 March 2013, with 71% of its underlying assets in Asia (including Singapore), and 25% in the mature economies of North America, Europe, Australia & New Zealand. Around 2% of the portfolio is held in Latin America. Temasek’s investment themes center on: transforming economies, growing middle income populations, deepening comparative advantages and emerging champions.
Banco Santander’s chief executive officer, Javier Marín says: “With this alliance, Santander will significantly increase its fund administration, depositary and custody business in markets where we are already leading providers. The transaction will enable us to increase and improve the products and services we offer our clients, with a higher value-added proposition adapted to their needs.”
Daniel Zilberman, Warburg Pincus managing director and head of its European Financial Services Group, says: “We are pleased to partner with Banco Santander and the Santander Custody management team to enhance the company’s focus on providing best-in-class products and services to its customers in Spain and Latin America. The custody market benefits from long term structural growth and we look forward to supporting management in accelerating the company’s growth and service offering.”
Singapore SWF to Acquire 50% of Santander’s Custody Operations
Banco Santander also plans to grow its custody business by entering into a definitive agreement with an affiliate of Warburg Pincus, a global private equity firm focused on growth investing.
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