San Salvador, El Salvador, May 4, 2004—The
International Finance Corporation, the private sector arm of the World
Bank Group, has signed an agreement to acquire up to 25 percent of the
share capital of AFP Confia S.A., one of the leading pension fund administrators
in El Salvador.
AFP Confia is fully owned by the Cuscatlán Group, a major financial conglomerate
in Central America. In December 2003, Cuscatlán Group entered into a share
purchase agreement with Citigroup International, controlling shareholder
of Confia, to acquire 100% of the shares of Confia AFP.
IFC’s financing, through an equity investment in AFP Confia, will help
Cuscatlán develop its new pension administration business and support its
regional growth strategy. This is IFC’s third transaction with Cuscatlán
Group. In October 2002, IFC provided a $40 million financing package to
support the expansion and consolidation of the Group's operations within
Central America. In addition, in 1998 IFC provided the Group with a $25
million long-term credit line for on-lending to Salvadoran companies.
The agreement was signed today in San Salvador by IFC’s Chief, Peter Woicke,
and Mauricio Samayoa, President of Cuscatlán Group.
Mr. Woicke, also Managing Director of the World Bank Group, said, “As
has been demonstrated in several countries in Latin America, the development
of a private pension system can have a strong developmental impact, not
only by improving social security, but also in developing domestic capital
markets and the private sector. Through this investment, IFC has the opportunity
to contribute significantly to the development of the financial services
industry in Central America.”
Mr. Samayoa said, “We are extremely pleased with the successful partnership
we have developed with IFC. They fully understand and appreciate our vision
for creating the leading integrated financial services group in Central
America and have demonstrated their support with a very timely decision
to assist us in the acquisition of AFP Confia. We thank IFC for the confidence
placed in us and look forward to continue working together in the future.”
Jyrki Koskelo, IFC’s Director for Global Financial Markets, added, “IFC
has had a strong institution-building role in the development of El Salvador’s
private pension fund system. By strengthening one of its leading pension
fund administrators, IFC has the opportunity to continue supporting the
development of the country’s private sector. This investment will support
Cuscatlán’s regional growth strategy and help consolidate the Group as
one of the leading providers of integrated financial services in Central
The private pension system in El Salvador began operations in July 1998,
making it the first country in Central America to replicate the successful
Chilean model of a defined-contribution private pension system. Reform
of the former state-run, "pay-as-you-go" social security system
was part of the Government's ambitious agenda for market-based reforms.
By the end of 2003, the system had enrolled 1,074,493 affiliates and $1.5
billion in assets under management.
Cuscatlán Group, through its holding company Corporación UBC Internacional
S.A. (UBCI), is the second-largest financial group in Central America.
Through its banking groups in Costa Rica, El Salvador, Guatemala, and Panama,
it provides corporate banking, credit cards, mortgages, factoring, insurance,
stock brokerage, trade finance, and asset management to a range of clients
in the region. UBCI was listed on the Costa Rican stock market through
an initial public offering in July 2002, and in November 2003 its shares
were listed on the LATIBEX program in the Madrid Stock Exchange. As of
December 31, 2003 UBCI had US$3.6 billion in assets and US$351.0 million
IFC's mission (www.ifc.org)
is to promote sustainable private sector investment in developing countries,
helping to reduce poverty and improve people's lives. IFC finances private
sector investments in the developing world, mobilizes capital in the international
financial markets, helps clients improve social and environmental sustainability,
and provides technical assistance and provides technical assistance and
advice to governments and businesses. From its founding in 1956 through
FY03, IFC has committed more than $37 billion of its own funds and arranged
$22 billion in syndications for 2,990 companies in 140 developing countries.
IFC's worldwide committed portfolio as of FY03 was $16.8 billion for its
own account and $6.6 billion held for participants in loan syndications.