Principal Financial has signed a definitive agreement to acquire 100% of Chile's AFP Cuprum for $1.51bn, in an effort to widen its presence in emerging markets.
The deal involves sale of 63% ownership in Cuprum held by Empresas Penta and Inversiones Banpenta Limitada, which is pursuant to a public tender offer including the remaining 37% of publicly traded shares.
Principal Financial chairman, president and chief executive officer Larry Zimpleman said, "This acquisition continues our effort to find targeted, strategic acquisitions that strengthen our competitive position in the most attractive emerging retirement and long-term savings markets."
"Cuprum represents the sixth such transaction in the past two years and adds meaningfully to our fee-based earnings, giving us continued financial flexibility."
Expected to complete in first quarter 2013, the transaction is subject to Chilean regulatory approval and satisfying other conditions.
The Chilean pension manager has approximately $32.1bn of assets under management as of 30 June 2012, and offers mandatory employee-funded pension plans, voluntary pension products (APV), and other long-term savings products.
Growth in the country's pension market has been driven by increasing middle class, stable economy and growth in voluntary retirement products.
Principal received financial advice from Lazard, while Cariola, Díez, Pérez-Cotapos and Debevoise & Plimpton acted as legal counsel on the transaction.