Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Event-Driven

<ul>
<li>The agreement between Grupo Gilinski and the Grupo Empresarial Antioqueño (GEA) grants Gilinski control of food company Nutresa, whilst Gilinski exits from stakes in Grupo Sura and affiliate Grupo Argos</li>
<li>This deal implies the end of Grupo Gilinski’s ambition to control BanColombia and even marks the end of Gilinski exerting activist shareholder influence over the bank’s management</li>
<li>BanColombia’s fundamental outlook, having improved to 1Q23, now looks tougher, not least due to the heightened political risk of the populist Petro administration; use the share price bounce to sell</li>
</ul>


The agreement between Grupo Gilinski and the Grupo Empresarial Antioqueño (GEA) grants Gilinski control of food company Nutresa, whilst Gilinski exits from stakes in Grupo Sura and affiliate Grupo Argos
This deal implies the end of Grupo Gilinski’s ambition to control BanColombia and even marks the end of Gilinski exerting activist shareholder influence over the bank’s management
BanColombia’s fundamental outlook, having improved to 1Q23, now looks tougher, not least due to the heightened political risk of the populist Petro administration; use the share price bounce to sell


Grupo Gilinski – Grupo Sura; The End of the BanColombia (CIB US) Affair

<ul>
<li>For Grupo Gilinski to achieve shareholder control of BanColombia seems increasingly unlikely, and there increased opposition from Grupo Sura and the Grupo Empresarial Antioqueño (GEA)</li>
<li>Nonetheless, Gilinski is effectively creating shareholder value by behaving like an activist investor putting pressure on management teams, particularly in BanColombia and in the other core components of the GEA</li>
<li>BanColombia is delivering improved fundamental performance, as seen in 1Q22 and 2Q22 results, with 2022E ROE guidance of c20% yet to be reflected in its modest PBV ratio of 0.9x</li>
</ul>


For Grupo Gilinski to achieve shareholder control of BanColombia seems increasingly unlikely, and there increased opposition from Grupo Sura and the Grupo Empresarial Antioqueño (GEA)
Nonetheless, Gilinski is effectively creating shareholder value by behaving like an activist investor putting pressure on management teams, particularly in BanColombia and in the other core components of the GEA
BanColombia is delivering improved fundamental performance, as seen in 1Q22 and 2Q22 results, with 2022E ROE guidance of c20% yet to be reflected in its modest PBV ratio of 0.9x


Grupo Gilinski – Grupo Sura; Focus on BanColombia (CIB US)

<ul>
<li>Indirect stake-building in Grupo Sura and related companies means Gilinski is closing in on indirect control of BanColombia; Gilinski’s latest move is the offer for Grupo Argos shares</li>
<li>We believe that Gilinski’s strategy of  “indirect activism” towards BanColombia has incentivised management to deliver improved performance, as seen in 1Q22, with management’s perhaps conservative 2022E ROE guidance at 15%+</li>
<li>Political risk may be receding, now that the firebrand left-winger Petro confronts Hernandez in mid-June’s Presidential election run-off; Hernandez could win by uniting the right and centre anti-Petro vote</li>
</ul>


Indirect stake-building in Grupo Sura and related companies means Gilinski is closing in on indirect control of BanColombia; Gilinski’s latest move is the offer for Grupo Argos shares
We believe that Gilinski’s strategy of  “indirect activism” towards BanColombia has incentivised management to deliver improved performance, as seen in 1Q22, with management’s perhaps conservative 2022E ROE guidance at 15%+
Political risk may be receding, now that the firebrand left-winger Petro confronts Hernandez in mid-June’s Presidential election run-off; Hernandez could win by uniting the right and centre anti-Petro vote


Grupo Gilinski Stays Focused on BanColombia, with Political Risk Potentially Receding in Colombia

<ul>
<li>Gilinski’s higher price incremental share bids for both Grupo Suramericana and Nutresa are intended to make Gilinski the largest shareholder in Suramericana and the majority shareholder in Nutresa</li>
<li>We maintain that this strategy is the next step in Gilinski’s plan to gain control of BanColombia indirectly, and also gain control of Suramericana’s interests in asset management and pensions</li>
<li>We see further upside potential for Grupo Suramericana shares, as well as BanColombia shares; the latter are attractively valued versus LatAm peers</li>
</ul>


Gilinski’s higher price incremental share bids for both Grupo Suramericana and Nutresa are intended to make Gilinski the largest shareholder in Suramericana and the majority shareholder in Nutresa
We maintain that this strategy is the next step in Gilinski’s plan to gain control of BanColombia indirectly, and also gain control of Suramericana’s interests in asset management and pensions
We see further upside potential for Grupo Suramericana shares, as well as BanColombia shares; the latter are attractively valued versus LatAm peers


Grupo Gilinski Ups the Ante on Grupo Suramericana with Enhanced Bids

Grupo de Inversiones Suramericana / Event-Driven

<ul>
<li>Grupo Gilinski’s bid for upto 31.68% of Grupo Suramericana’s ordinary shares follows Gilinski’s bid for 62.625% of Nutresa in November; this is potentially a big wake-up call in corporate Colombia</li>
<li>Gilinski’s bids are, in our view, initial steps in an effort to gain control of BanColombia via the Grupo Suramericana holding, whilst also highlighting the discounted valuations of Suramericana’s holdings</li>
<li>We believe that Gilinski’s offer still provides upside potential for Suramericana ordinary shares; this should also support BanColombia ordinary shares and, under specific circumstances, also be positive for BanColombia ADRs</li>
</ul>


Grupo Gilinski’s bid for upto 31.68% of Grupo Suramericana’s ordinary shares follows Gilinski’s bid for 62.625% of Nutresa in November; this is potentially a big wake-up call in corporate Colombia
Gilinski’s bids are, in our view, initial steps in an effort to gain control of BanColombia via the Grupo Suramericana holding, whilst also highlighting the discounted valuations of Suramericana’s holdings
We believe that Gilinski’s offer still provides upside potential for Suramericana ordinary shares; this should also support BanColombia ordinary shares and, under specific circumstances, also be positive for BanColombia ADRs


Gilinski Targets Grupo Suramericana’s Financial Operations in Hostile Bid

Colombia

Grupo de Inversiones Suramericana holds investments in leading Colombian companies as well as other important stakes in other countries of the Americas. This portfolio is mainly concentrated in strategic investments in the financial, insurance and social security sectors and is complemented by other investments in services, food, and cement sectors amongst others.

Grupo de Inversiones Suramericana (GRUPOSUR CB)

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Grupo de Inversiones Suramericana (GRUPOSUR CB)

Grupo Gilinski – Grupo Sura; The End of the BanColombia (CIB US) Affair

This agreement marks the end of Gilinski’s ambition to control BanColombia, as well as Gilinski exerting activist shareholder influence over the...

Victor Galliano

Grupo Gilinski – Grupo Sura; Focus on BanColombia (CIB US)

Gilinski's activist style is putting pressure on GEA management, especially BanColombia, to improve returns; the higher ROE in 1Q22 and 2Q22 has...

Victor Galliano

Grupo Gilinski Stays Focused on BanColombia, with Political Risk Potentially Receding in Colombia

Gilinski’s “indirect activism” towards BanColombia is focusing management to deliver improved performance, with political risk potentially...

Victor Galliano

Grupo Gilinski Ups the Ante on Grupo Suramericana with Enhanced Bids

Gilinski upped the bids on Sura & Nutresa, with the end-game being to gain control of BanColombia & merge it with Gilinski-controlled Banco GNB...

Victor Galliano

Gilinski Targets Grupo Suramericana’s Financial Operations in Hostile Bid

Jaime Gilinski aims to gain control of BanColombia through two hostile bids; there is upside potential for Grupo Sura ordinaries and BanColombia...

Victor Galliano

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