Colfondos S.A. Pensiones y Cesantias (“Colfondos”)


Investment Thesis
  • Multiple arbitrage opportunity given a valuation significantly lower than public trading multiples and comparable transactions
  • Acquisition partially financed through a seller’s note, expected to be repaid with dividends
  • Potential to capitalize on the growth of the voluntary pension market, leveraging on the product’s tax incentives and implementing an aggressive commercial strategy
  • incentivize management team with a focused strategy and equity linked compensation
Linzor Value-Add
  • Top tier management team, with properly aligned incentives, in place to streamline operations, scale the business and significantly improve profitability
  • Retained IT consulting firm to lead disintegration project from Citibank, the seller
  • Implementation of a comprehensive, five-year strategic plan aimed to double the company’s EBITDAP by 2015.
    • Improve commercial sales and marketing targeting for the mandatory and severance businesses and revamping the service offering and sales strategy for the voluntary business
    • Expense rationalization, with emphasis on branch strategy and administrative expenses
    • Redesigned core processes with efficiency requirements and measurable key indicators
  • In 2012, Linzor and co-investors reached an agreement to sell a 51% stake in Colfondos to Bank of Nova Scotia. The exit generated returns significantly in excess of Linzor’s base case.