David Bojanini García • A Transformation In Savings

 

Photo: Courtesy Of Grupo Sura

CEO, GRUPO SURA
2012 FINANCIER OF THE YEAR

To make a long story short, David Bojanini García and a team of 18 people have transformed Grupo Sura – a small, almost unknown, investment group from Medellín, Colombia – into the largest pension fund administrator in Latin America, with 25 million customers and more than $100 billion of assets under its management. The group arrived at that level in 2011 with the purchase of ING’s Latin American pension business for $3.7 billion.

Currently, the office of Bojanini García is one of the best observation posts to follow the movements of pension savings, which started to grow in the region in the 1980s with the reforms in Chile, and in the 1990s with the reforms of seven other countries, including Colombia, Argentina, Uruguay and Mexico. The assets under management in the pension funds, which are worth almost 70 percent of the GDP in Chile, and between 10 and 20 percent of GDP in the other large Latin American economies, are one of the most powerful tools for accelerating development.

Latin Trade spoke with the CEO about his approach.

 

The biggest decision that Grupo Sura has made in its entire history was the purchase of ING in the region. What was the most important factor that you took into account to set the offer price for the purchase?

In the analysis of these assets, we took into account many factors to be able to make a proposal sufficiently competitive to be a winner. We used different valuation models in addition to imputing a value for the synergies that would result from a business like this, which is what enabled us to get a feel for the price in a very competitive acquisition process. In fact, the synergies were more encouraging for an investment like this, generating returns interesting for the future.

 

It was clear, then, that you were determined to better the offers of your competitors?

It was a purchase that fit perfectly into our expansion plans, not only in terms of geographical location, but also in relation to the strategic sector this business represents. We wanted to make a competitive proposal and the previous analyses enabled us to present an interesting economic offer together with an attractive transition and consolidation plan. We were aggressive, but at the same time we measured the risks very carefully, and that’s why we were able to get this done.

 

In addition to creating the private pension funds, what is the most successful policy measure that has been implemented in the region to make home savings grow?

From the point of view of obligatory pensions, the individual savings system ensures the peace of mind for people of retirement age. Governments have the additional task of making reforms that increase the coverage. In some countries, and with different characteristics, there are some tax incentives to generate higher voluntary savings, and that’s why we at Grupo Sura are working to encourage the development of the market in this sense, through complementary alternatives of savings and investment, in all of the countries in which we have a presence. This is especially true in Colombia, a country with an important tax incentive that stimulates savings.

 

What policy measures are needed in Latin America to speed up the growth in home savings?

This process is evolving in the way in which homes can satisfy their basic needs. In these countries, we will be observing significant growth in savings, given the formalization of labor, the lowering of unemployment rates and the growth of gross domestic product per capita. As was mentioned in a recent World Bank study, the number of middle class people in Latin America has risen from 100 to 150 million in the decade of the 2000s.

But a key factor for stimulating voluntary savings is definitely the tax process, directed not only at ordinary people but also at entrepreneurs. This type of savings helps people put together a complement of pension for their retirement, with plans at the personal and entrepreneurial level. It’s also interesting to see that these savings work together to be a leverage to the development our countries.

 

How do you make decisions? Do you rely on your instinct? On the numbers? On something else?

To make decisions, the most important thing is to have complete and timely information, as well as keeping calm. Intuition helps, provided that it’s backed up by experience and can support an objective and well-informed vision about the issue that is being analyzed.

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