Advent Buys Part in Argentina’s Visa Operator for $725 Million

(Bloomberg) -- Advent International has agreed to buy a majority stake in the Argentine operations of Visa for about $725 million from a group of local banks.

The Boston-based private equity firm agreed to acquire 51 percent of Prisma from its shareholders, a group of 14 banks and Visa Inc., in a deal that valued the company at $1.4 billion, according to Prisma. The largest stake was sold by Banco Santander Rio SA for $134 million, according to regulatory filings from some of the banks involved in the sale.

“Prisma is the leading player in a market poised for strong growth driven by the increasing penetration of electronic payments in Argentina," said Juan Pablo Zucchini, a managing partner at Advent in Sao Paulo. The deal is Advent’s eighth investment in the payments sector globally since 2008, according to a statement.

The banks will receive 60 percent of the payment when the shares are transferred, and the remaining 40 percent in five years. The banks will get 70 percent of the payment in U.S. dollars and the remainder in Argentine pesos. Prisma is a payment method company that processes 7 billion transactions per year in Argentina with more than 1,300 employees.

Monopoly Investigation

In 2017, Argentina’s consumer watchdog accepted a divestment plan, proposed by Prisma, after the company was investigated for monopolizing the market for credit cards and electronic payments. But after high initial interest from bidders, it was among deals that were hurt by Argentina’s economic troubles, spiraling borrowing costs and market volatility. The divestment plan also means Prisma’s owners must sell their remaining 49 percent stake over the next three years.

Goldman Sachs Group Inc., the financial adviser for the banks that own the company, had originally valued the company at as much as $2 billion, according to local reports. But interest fizzled out and only one bidder submitted an offer below what the sellers originally hoped for, leading the government to extend its original divestment deadline of September 2018.

The valuation at which it was sold was "lackluster" for the banks, according to Juan Manuel Gotsis, an analyst at Buenos Aires-based broker TPCG Valores SA, who noted that the banks would have likely waited for better conditions if not for the new Jan. 23 deadline from the regulators.

Prisma Chief Executive Officer Diego Maffeo said the deal is one of the largest private equity transactions in Argentina over the last 30 years. The company, which already invests about $20 million per year in its growth, looks to ramp up that figure in the next two years.

Advent is eyeing opportunities in crisis-ridden Argentina, including in sectors such as health, financial services and retail, said Zucchini. The firm, which also follows Brazil and Mexico closely, may consider exiting its stake through an initial public offering.

“We see Argentina as an investment opportunity beyond the short-term challenges,” he said. “We’re optimistic on Argentina and see growth potential.”

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