Citigroup Inc. struck deals to sell an additional 24% of its Mexican retail bank for around $2.5 billion to investors such as private equity firms, a bank and a sovereign wealth fund, bolstering the business as Mexican billionaire Fernando Chico Pardo takes over.
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The investors agreed to buy 499 million shares of Grupo Financiero Banamex for around 43 billion pesos ($2.5 billion), according to a statement Monday. The transactions are subject to regulatory approval and are expected to close this year. The sale was at a small premium to the initial stake Citigroup sold to Chico Pardo last year.
The stakes are all less than 5% each and include investments from funds managed by Blackstone Inc., General Atlantic, Brazilian bank Banco BTG Pactual SA and Afore Sura, the Mexican pension fund of Colombia's Sura Asset Management, Citigroup said in a statement confirming Bloomberg News' earlier report.
Insurer Chubb Ltd, funds from Liberty Strategic Capital and Qatar Investment Authority also bought equity stakes, the company said.
"Their investment is a further endorsement of Banamex's long-term strategy, market leadership and growth prospects, and their commitment solidifies Banamex's foundational position within Mexico's banking system," Ernesto Torres Cantu, head of international at Citigroup, said in the statement.
The co-chief executive officers of Grupo Televisa SAB were also among the Mexican family offices taking stakes, according to people with knowledge of the matter, who asked not to be identified discussing private talks.
Televisa said in a statement that it doesn't comment on investments that aren't directly made by the institution.
The transaction is General Atlantic's largest growth equity investment in Mexico so far, the firm said in a statement, adding that it acquired the largest stake among the pack of new investors.
"We see Banamex as a foundational pillar of Mexico's financial ecosystem, uniquely positioned to play a leading role in the country's ongoing advancement and growth," Luis Cervantes, a managing director at General Atlantic, said in the statement.
Citigroup, under Chief Executive Officer Jane Fraser, has been seeking to pull back from its Mexican retail business, called Grupo Financiero Banamex. Last year, the company sold 25% of Banamex to billionaire Chico Pardo for 42 billion pesos ($2.43 billion). The latest stakes were sold at 0.85 times book value, just above the 0.8 times paid by Chico Pardo.
Chico Pardo has said he will lead Banamex with his sons. He was active in the selection of the new investors, Citigroup said. The bank noted that it doesn't anticipate selling any more Banamex stakes this year.
The Wall Street bank has also been weighing an initial public offering for Banamex as it seeks to fully exit the operation. One part of that plan involved offloading smaller stakes in the operation ahead of any IPO. Timing for the IPO will depend on a market window as well as regulatory approvals, Citigroup said Monday.
With the latest deals, Citigroup will decrease its ownership in the business, while handing stakes to major private equity firms and a bank, as well as well-known Mexican executives. Televisa's co-CEOs, Alfonso de Angoitia and Bernardo Gomez, took over management of Mexico's largest broadcaster in 2017. They recently solidified their holdings in Televisa even more, agreeing to buy shares from Emilio Azcarraga Jean, who used to be chairman and CEO of the company.
Citigroup has been winding down or selling retail arms around the world in a bid to simplify the bank, but plans to keep a corporate banking unit and brokerage in Mexico.
