BOGOTA, March 29 (Reuters) - Colombian investment holding company GrupoSURA will reduce its debt by 10 percent this year - equivalent to about 450 billion pesos ($141 million) - its chief executive said on Friday, and has no plans to expand through acquisitions in 2019.
The conglomerate has invested more than $9 billion in expanding its financial and insurance business in 10 Latin American countries over the last seven years.
The debt reduction plan will include the sale of some assets and operational efficiencies, chief executive David Bojanini said in a telephone call with Reuters.
“We do have a plan to reduce our debt level, which isn’t worrying or excessive, but we do want to lower it a bit,” he said.
The company’s debt totaled some 5 trillion pesos at the close of 2018.
“It’s a gradual process where we are taking looking for more efficiencies into account, obviously getting out of minor assets that aren’t part of the core of the business, but in general it’s about optimizing our use of funds,” said Bojanini, who has worked with GrupoSURA for 39 years.
Bojanini would not give a profit estimate for this year, though he projected growth of 10 percent in operating income from the 19.5 trillion pesos the company recorded last year.
Net profit fell 7.7 percent year-on-year in 2018 to 1.34 trillion pesos, because of losses derived from the sale of its life insurance subsidiary in Chile, a decision not to participate in a Colombian insurance bidding process and lower yield income.
“Last year capital markets were not so good and that really affected our income. This year the markets have behaved better, but it’s very difficult to risk saying how much we’re going to have in profits,” said Bojanini.
The company will spend $80 million in technology improvements at Suramericana and SURA Asset Management and is confident its growth will outpace economic expansion in the countries where it operates.
“We can’t be guided by growth projections for the global or regional economy - our goals are much more ambitious,” Bojanini said. “In Latin America the penetration of financial products and insurance is very low ... so there’s a great growth opportunity.”
GrupoSURA currently has no plans to issue bonds or shares, although Bojanini did not rule out debt issuance.
“At this time we don’t have a plan like that - sometimes you can issue debt instruments to replace others, but there won’t be an increase in debt.”
$1 = 3,190.94 Colombian pesos Reporting by Nelson Bocanegra Writing by Julia Symmes Cobb Editing by Helen Murphy and Chris Reese