Banco Santander has entered into a definitive agreement with FINESP Holdings II B.V., an affiliate of Warburg Pincus, to create a leader in the custody business. Under the terms of the agreement, which is conditional upon legal and regulatory approvals, the group which will also include Temasek, a Singapore based investment company, will acquire a 50% stake in Santander’s current custody operations in Spain, Mexico and Brazil, as the business newspapper Expansion had informed some months earlier. The remaining 50% will be owned by Santander. The transaction is expected to close in the fourth quarter of 2014.
Santander is a leading custody provider in Spain, Brazil and Mexico, with EUR 738 billion in assets under custody. The transaction values Santander’s custody operations in these countries at EUR 975 million and will generate a net capital gain for the Santander Group of approximately EUR 410 million, which will be used to strengthen the balance sheet. The company will focus on enhancing the products and services provided to its customers through greater investment in its technology platform and team.
Warburg Pincus is a global private equity firm focused on growth investing with more than $37 billion assets under management. The firm has a long standing successful track record in financial services investing, and has previously partnered with Banco Santander to jointly build best-in-class businesses. Incorporated in 1974, Temasek is an investment company based in Singapore. Supported by 11 offices globally, 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.
Banco Santander’s Chief Executive Officer, Javier Marín said: “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, said “We are pleased to partner with Banco Santander and the Santander Custody management teamto enhance the company'sfocus 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.”