MEXICO - The Principal Group will acquire HSBC's Mexican pension fund business for $198m.
In a statement yesterday, Principal said it would acquire HSBC Afore from Grupo Financiero HSBC, and merge those assets into Principal Afore.
Afores, as Mexican pension funds are called, have a combined 1.4trn pesos ($118bn) in assets. After the acquisition, Principal Afore's asset will jump 62% to $2.9bn, and become the country's sixth largest pension provider.
"The HSBC Afore business fits naturally with our international strategy, providing critical scale and expanding our growing base in key emerging markets like Mexico," said Norman Sorensen, chairman of Principal International.
Principal began operating in Mexico in 1993, but since then Mexican pension funds have been increasing in sophistication as the national regulator has approved a series of measures to allow more diverse portfolios.
In February of last year, for example, the Comisión Nacional del Sistema de Ahorro para el Retiro (Consar) expanded the range of equities pension funds could buy and introduced flexible value-at-risk rules. (Global Pensions; 19 February 2010)
And yesterday the head of Consar Pedro Ordorica, told Bloomberg News the regulator plans to allow pension funds to hire more outside managers to help manage investments. (Global Pensions; 11 April 2011)
The deal between Principal and HSBC is expected to close in the third quarter of this year and is subject to regulatory approval.
Mark Evans has been appointed as a director at Independent Trustee Services (ITS) to lead trustee appointments in London.
The Pension Protection Fund (PPF) is consulting on changes to the actuarial assumptions it uses in valuations in a bid to better reflect the bulk annuity market, with schemes set to move into surplus on aggregate.
Private sector defined benefit (DB) schemes were 96.3% funded on a Pension Protection Fund (PPF) compensation basis at the end of July, according to the lifeboat fund's monthly index.
Conduent has completed the sale of its actuarial and human resource consulting business to private equity investor, H.I.G. Capital.