* JV valued at $900 mln
* Popular sees gain of $600 mln from deal
* Popular stock see-saws on Nasdaq
(Adds analyst comments, details; updates stock activity)
By Anurag Kotoky
BANGALORE, July 1 Popular Inc (BPOP.O) said it
will sell a 51 percent stake in its payment technology
subsidiary Evertec to funds managed by Apollo Management LP,
through a newly formed joint venture.
The joint venture, which is valued at about $900 million,
will result in a gain of about $600 million for the largest
bank in Puerto Rico, and will boost its capital ratios, the
company said in a statement.
"The agreement valued the Evertec subsidiary at $900
million, but historical cost for that for Popular is far below
that. So they were able to book a gain of $600 million on
that," B. Riley & Co analyst Joe Gladue told Reuters.
Popular's management was hinting at an expected price of
$900 million to $1.1 billion for the subsidiary.
The company's stock see-sawed on Nasdaq in morning trade,
going up by almost 7 percent, and paring all gains to trade
down more than 5 percent at $2.55.
The stock is one of the most active ones on Nasdaq, with a
50-day moving average volume of 27.8 million shares. On
Thursday, more than 20 million shares changed hands within an
hour and a half of trading.
Popular, which transferred its merchant acquiring and
processing and technology businesses to its subsidiary Evertec,
said the latest deal is expected to close in the third quarter
STOCK UNDERVALUED, DESPITE CASH CUSHION
Although the Puerto Rican economy is still in recession,
and the parent of Banco Popular still has a lot of problem
assets, the stock is still undervalued, said analyst Gladue,
who has a "buy" rating on the stock.
The island of Puerto Rico, a manufacturing hub for
petrochemical, pharmaceutical and technology companies, as well
as a tourism destination, faced the financial meltdown much
before the rest of the world went into recession.
U.S. regulators seized three Puerto Rican banks earlier
this year and sold their deposits to other banks, costing the
Federal Deposit Insurance Corp insurance fund $5.3 billion --
one of the largest losses in the banking crisis.
Popular bought the assets of W Holding Co, while Bank of
Nova Scotia (BNS.TO) (BNS.N) bought the deposits of R-G Premier
bank of Puerto Rico and Oriental Financial Group Inc (OFG.N)
bought those of EuroBancshares.
Popular, which just completed the W Holding deal, is
unlikely to buy back shares, raise dividend of repay funds it
received under the bailout program, despite the capital
cushion, Gladue said.
"I think they are going to hold on to the capital," he
Popular has operations in Puerto Rico, the United States,
the Caribbean, and Latin America, according to its website. It
operates 177 branches in Puerto Rico alone.
(Reporting by Anurag Kotoky in Bangalore; Editing by Roshni
Menon and Vyas Mohan)