Financiera Independencia to Acquire Apoyo Economico Familiar and Apoyo Financiero - Insurance News | InsuranceNewsNet

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December 22, 2010 Newswires
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Financiera Independencia to Acquire Apoyo Economico Familiar and Apoyo Financiero

MEXICO CITY, Dec. 22, 2010 -- Financiera Independencia, S.A.B. de C.V., SOFOM, E.N.R. (BMV: FINDEP; Pink Sheets: FNCRF)("Independencia" or the "Company")a leading Mexican microfinance lender of personal loans to lower income segment individuals and working capital loans through group lending microfinance, announced today that it has signed a purchase agreement to acquire in all cash transactions all of the outstanding shares of Apoyo Economico Familiar S.A. de C.V., SOFOM, E.N.R. ("AEF"), one of the largest unsecured personal lending institutions in Mexico, and has reached an agreement to purchase a controlling 77% ownership stake in Apoyo Financiero Inc. ("AFI"), a microfinance company primarily serving the unbanked Hispanic community in San Francisco, California. The combined total consideration for the transactions is Ps. 1,180 million.  Upon completion of these transactions, Independencia would increase its loan portfolio by approximately 15% and its client base by approximately 8%. The transactions have been approved by the Board of Directors of Independencia.

Transaction Highlights:

  • Further increases Independencia's market presence and geographic reach allowing the Company to establish a strong presence in Mexico City and the Metropolitan area, a market where Independencia does not currently have a personal loans operation, and strengthen its presence in the Southeastern states of Mexico
  • Leverage an operational model that has proved to be highly effective in large cities, like Mexico city, into new markets with similar characteristics
  • Gain access to a highly accomplished management team, with a strong track record in developing new microfinance markets
  • Establishes a foothold within the US Hispanic community in San Francisco, California, one of the fastest growing segments of the US population.

Mr. Noel Gonzalez, Chief Executive Officer, commented: "The acquisition of AEF is very important for Independencia as it will further consolidate the Company's leadership in providing personal loans to the low-income segment of the population. Geographic expansion into the Mexico City and Metropolitan area markets is a key element in our growth strategy, and we are very pleased to have achieved an agreement with AEF, a company that has demonstrated a solid track record and is already well positioned to continue to grow in its market. In addition, we will leverage the expertise of its management team, particularly that of Mr. Mauricio Galan, who will remain as CEO of AEF.  Having substantial experience in Microfinance, Mr. Galan founded Apoyo Economico Familiar in 2005, establishing the company as one of the leading personal loans institutions in Mexico City and achieving profitability within four years. We are also very pleased with the acquisition of AFI.  AFI will allow us to penetrate the very promising Hispanic market living in the US through a proven model that is positioned to grow significantly in that market."

Transaction Highlights (as of September 30, 2010):

  • Provides unsecured personal loans to both the formal and informal sectors, ranging from Ps.2,000 to Ps.20,000 with an average term of 18 months
  • Network of 97 branches in 11 of the 32 federal entities in Mexico, 65 of those located in Mexico City and the Metropolitan area.  One branch in San Francisco, California.  Total outstanding loan balance of approximately Ps.817.3 million and approximately 110,000 clients.
  • Robust risk management policies and procedures in place.  Total Non-performing loans plus write-offs to total loans of approximately 12.9%

Pro Forma Balance Sheet & Key Transaction Highlights

  • The acquired companies will contribute approximately 12.7% to the combined entity total loan portfolio
  • NPL ratio of the combined entity decreases from 10.5% to approximately 9.3%
  • Coverage ratio increases from 68% to approximately 73%
  • Equity to total assets ratio decreases from 34.7% to approximately 28.3% after the Transaction is finalized

Proforma Balance Sheet as of Sept. 30, 2010

(Millions of Mexican Pesos)

FINDEP

AEF

AFI*

FINDEP
Consolidated

ASSETS

Cash and Cash Equivalents

1,179.8

41.7

6.2

1,227.7

Performing Loans

5,017.5

777.4

30.1

5,824.9

Non-Performing Loans

585.8

8.2

1.7

595.7

Total Loan Portfolio

5,603.3

785.6

31.8

6,420.7

Allowances for Loan Losses

(398.1)

(34.6)

(1.1)

(433.8)

Total Loan Portfolio - Net

5,205.2

751.0

30.7

5,986.8

Fixed Assets

378.6

95.4

0.0

474.0

Differed Taxes and Other Assets

1,836.8

62.9

1.6

2,883.2

Total Assets

8,600.3

951.0

38.5

10,571.8

LIABILITIES

Bank and Other Entities Loans

5,170.6

704.0

-

7,054.6

Derivative Financial Instruments

166.6

-

-

166.6

Other Accounts Payable

275.2

64.3

18.6

358.1

Total Liabilities

5,612.4

768.3

18.6

7,579.3

Total Stockholders' Equity

2,987.9

182.7

19.9

2,992.5

Total Liabilities and Stockholders' Equity

8,600.3

951.0

38.5

10,571.8

* USD converted at an exchange rate of Ps. 12.40 / US dollar  for comparison

Closing

The transactions are expected to close during 1Q11, and will be financed with the Company's cash reserves and available lines of credit.  The acquisition of AEF is subject to the satisfaction of customary conditions to closing, including the approval of Mexico's Federal Competition Commission. The acquisition of AFI is subject to the execution of the corresponding acquisition documents.

Conference Call to Discuss the Transaction

Independencia will hold a conference call to discuss the transaction with the investment community tomorrow, December 23, 2010 at 11:00 am U.S. EST (10:00 am Mexico City Time). The conference call can be accessed by dialing 866-393-9621 (U.S.) or 706-758-4196 (international) and entering passcode 33739819. A live web cast of the conference call and replay will be available at http://www.independencia.com.mx.

A replay will be available between 12:00 pm EST on December 23 and 11:59 pm EST on December 30, 2010. The replay is accessible by dialing 800-642-1687 (U.S.) or 706-645-9291 (international) and entering passcode 33739819.

A slide presentation will also be available beginning December 23, 2010 at 8:00 am U.S. ET (7:00 am Mexico City Time) for download from the investor relations section (investor presentations) of the Company's corporate website at http://www.independencia.com.mx.

About Financiera Independencia:

Financiera Independencia, S.A.B. de C.V., SOFOM, E.N.R. (Independencia), is a Mexican microfinance lender of personal loans to individuals and working capital loans through group lending microfinance. Independencia provides microcredit loans on an unsecured basis to individuals in the low-income segments in Mexico in urban areas of both the formal and informal economy. As of September 30, 2010, Independencia had a total outstanding loan balance of Ps.5,603.3 million, operated 370 offices in Mexico and Brazil and had a total labor force of 11,153 people. The Company listed on the Mexican Stock Exchange on November 1, 2007, where it trades under the symbol "FINDEP". On November 30, 2009Independencia launched a sponsored Level I American Depositary Receipt (ADR) program in the United States. Each ADR represents 15 shares of Independencia common stock and trades over-the-counter (OTC). More information can be found at www.independencia.com.mx

Some of the statements contained in this press release discuss future expectations or state other forward-looking information. Those statements are subject to risks identified in this press release and in Financiera Independencia's filings with the Mexican Stock Exchange. Actual developments could differ significantly from those contemplated in these forward-looking statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Our forward-looking statements speak only as of the date they are made and, except as may be required by applicable law, we do not have an obligation to update or revise them, whether as a result of new information, future or otherwise.

This press release does not constitute an offer for the sale of or a solicitation of offers to purchase any securities. The shares expected to be issued in the capital increase will not be registered under the US Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

SOURCE Financiera Independencia, S.A.B. de C.V., SOFOM, E.N.R.

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