ZURICH (Reuters) - Swiss bank Julius Baer BAER.VX 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 UBSN.VX, the world’s biggest private bank measured by assets.
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 Julius Baer’s.
($1 = 2.3252 Brazilian Reals)
($1 = 0.8843 Swiss Francs)
Editing by David Goodman and Mark Potter