A Scotiabank location in Toronto.Deborah Baic/The Globe and Mail
Bank of Nova Scotia is expanding its wealth management business in Peru with the acquisition Tuesday of a half interest in AFP Horizonte, the South American country's third-largest pension fund manager, in a deal valued at $260-million.
SURA Asset Management, a subsidiary of Grupo SURA, is buying the other half interest in AFP Horizonte, BBVA's pension fund management business in Peru.
Scotiabank and SURA will jointly manage the company through a transition period until final regulatory approval is received.
After that, the company will be divided and Scotiabank will integrate its half of the business with Profuturo AFP, its existing pension fund management business in Peru.
"Pension fund management is a business of strategic importance for global wealth management's international operations and an area where we see great potential for future organic growth in Latin America," said Barb Mason, executive vice-president of global wealth management at Scotiabank.
"This acquisition will allow us to quickly increase the scale of our existing Profuturo AFP business and become a bigger presence in this growing segment."
With $9-billion (U.S.) in assets under management, AFP Horizonte is the third-largest pension fund manager in Peru and serves 1.4 million clients in 17 branches across the country.
Profuturo AFP was acquired by Scotiabank in 2008 and is Peru's fourth-largest pension fund manager with a 15 per cent market share. It currently has $5.8-billion in assets under management and serves 1.2 million customers through 14 branches.
Integration with the AFP Horizonte will bump that to about $10.3-billion in assets under management and bring Profuturo's market share to 27 per cent.
"Pension fund management is one of the largest wealth management segments in Latin America and we see an increased demand in this area as the young populations in this region enter the workforce and participate in the formal economy," said Carlos Gonzalez-Taboada, CEO of Scotiabank in Peru and president of Profuturo AFP.
Scotiabank is Canada's most international bank serving some 19 million customers in more than 55 countries.
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