* Increases stake in GPS to 80 pct from 30 pct
* Analyst estimates transaction price at 100 mln Sfr
* Expects deal to be boost earnings in 2014
* Aims to build leading Brazilian wealth management business
(Adds estimated price, analyst comment, shares)
By Caroline Copley
ZURICH, March 25 Swiss bank Julius Baer
has raised its bet on Latin America's largest wealth
management market, buying a majority stake in Brazil's GPS for
an estimated 100 million Swiss francs ($113 million), as part of
a drive to expand abroad.
The deal underscores Zurich-based Baer's commitment to
gaining greater access to markets in Asia and South America as a
crackdown on tax evasion hits private banking, which provides
tailored services to wealthy individuals, in Switzerland.
Baer is looking to increase its assets under management from
emerging markets to 50 percent by 2015, it has said, without
disclosing the current percentage.
The Swiss private bank has increased its holding in GPS
Investimentos Financeiros e Participacoes to 80 percent from the
30 percent it bought in May 2011, it said on Tuesday.
The move follows a successful investment to date. GPS is the
largest independent wealth manager in Brazil and has doubled its
assets under management in the past three years to roughly 15
billion Brazilian reals ($6.5 billion).
Baer did not disclose the transaction price, but said the
deal would lower a key capital ratio by 60 basis points.
Given that Baer has 15.9 billion francs in risk-weighted
assets, Kepler Cheuvreux analyst Dirk Becker estimated the bank
would have paid around 100 million francs for the 50 percent
stake, valuing GPS as a whole at 200 million francs, or 3
percent of invested client assets.
Baer said the transaction should deliver a low single-digit
percentage boost to its 2014 adjusted earnings per share.
"GPS is profitable and there is no need for restructuring or
integration. We believe the earnings contribution would be 10-15
million francs, a decent return on the 100 million acquisition
price," said Becker, who has a "reduce" rating on the stock.
Shares in Julius Baer were trading up 1.1 percent at 38.84
francs by 0853 GMT, outperforming a 0.3 percent firmer European
bank sector index.
Founded in 1999, GPS employs about 120 staff and has
recorded profitable growth over the last ten years. Tapping
wealthy Brazilians is a strategy being pursued by larger rivals
such as UBS, the world's biggest private bank measured
Baer said GPS's current partners would continue to lead the
business during its integration into the Swiss bank, and it
would continue to operate under the GPS brand.
As well as its GPS holding, Baer has snapped up other assets
to expand its presence in emerging markets in recent years.
In August 2012, it bought Merrill Lynch's overseas wealth
management arm, though the deal has eroded the bank's
profitability because the Merrill assets are less lucrative than
($1 = 2.3252 Brazilian Reals)
($1 = 0.8843 Swiss Francs)
(Editing by David Goodman and Mark Potter)