Itau Unibanco Holding SA (ITUB4), Latin America’s biggest bank by market value, purchased 299 million shares of Redecard SA for 10.5 billion reais ($5.17 billion) as it completed its plan to take the credit-card processor private.
Redecard will be de-listed from the Bovespa and Itau “will absorb Redecard, and that will create synergies and they will be able to cut costs,” said Pedro Galdi, chief strategist at brokerage SLW Corretora in Sao Paulo. “It was a long process, like a soap opera, but now Itau has reached its goal.”
With a pre-existing 50% stake in Redecard , Itau Unibanco decide to consolidate their payment processing systems in the face of stronger central bank deregulation of the space in Brazil.
Redecard was created as a spinoff of Credicard in 1996 by Citigroup Inc., Banco Itau Holding Financeira SA and Uniao de Bancos Brasileiros SA, known as Unibanco, to process credit-card payments and merchant-acquiring businesses, according to its website. Barueri, Brazil-based Redecard raised 4.07 billion reais in an initial public offering in July 2007.
Itau Unibanco, is the sub-advisor on the Excel Latin America Fund. The fund’s mandate is to seek long-term growth by investing in equity securities of publicly traded Latin American companies. As of Sept 1, 2012 the fund has retunred 1.8% and 8.8% since inception.
Written by Jack S.