MetLife agreed to purchase Chile’s largest private pension fund, AFP Provida S.A. (Provida) for $2 billion.
The deal will be funded by a public cash tender offer for the outstanding shares of Provida and Spanish lender Banco Bilbao Vizcaya Argentia will transfer 64.3 percent of its stake to MetLife.
Provida had $45.3 billion in assets under management as of September and 1.8 million contributors.
The deal also includes a small asset management business in Ecuador.
“With this acquisition, MetLife is delivering on a key component of our strategy — expanding our presence in emerging markets,” said Steven A. Kandarian, chairman and CEO of MetLife.
As life insurers contend with a persistent low interest rate environment and consumers in Western countries are experiencing diminished purchasing power, many companies are looking to emerging markets in order to compensate and increase profits. MetLife, however, began incorporating emerging markets into their overall strategy in 2007, before the financial crisis and the residual effects that have caused many companies to take a look at developing markets.
Following the acquisition of Provida, MetLife’s operating earnings from emerging markets are expected to grow from 14 percent to 17 percent.
The transaction which is subject regulatory approvals is expected to close in the third quarter of 2013.