EXCLUSIVE-Chinese Shanghai Pengxin Group negotiates purchase control Indusval bank, say sources

                     



SAO PAULO (Reuters) - China's Shanghai Pengxin is negotiating the purchase of control of Indusval bank strategy to expand beyond commodities in Latin America, said three sources with direct knowledge of the matter.

Pengxin representatives and Indusval partners discussed potential scenarios for a deal, said two of the sources. Negotiations are at a preliminary stage and may not result in a deal, the sources said.

Ordinary bank stocks opened sharply higher on Tuesday and 13h07 showed appreciation of 22.8 percent, but with low turnover. Already preferential shares had gained 11 percent. The shares are not part of the Bovespa index, which retreated 0.18 percent.

In a statement early in the afternoon on Tuesday, the bank said that "constantly studying possibilities for new business and corporate arrangements," but so far there is no proposal, document or decision accordingly.

Indusval also said that following the legal proceedings to conduct a public offering of acquisition of their shares in the market and then cancel the public company registration and out of Level 2 of Corporate Governance of BM & FBovespa. The operation was approved in March and the bank said that the costs of maintaining the public company registration is not justified, given the low liquidity of its shares.

The Pengxin may invest up to $ 3 billion in acquisitions in Brazil, said the group's sources close to Reuters in April. The pursuit of Pengxin by companies in the financial, logistics and commodities is gaining momentum after the purchase in April for $ 200 million, the control of Fiagril Participações grain processing.

Pengxin representatives declined to comment.

The Chinese group has not hired an investment bank as advisor for negotiation with Indusval said the first source, adding that an internal team that handles mergers and acquisitions in the Asian group is considering possible targets.

Under the terms of the Fiagril purchase agreement, the Pengxin agreed to provide credit for the grain processor. Buying a bank with knowledge and customers in agricultural markets can facilitate the objectives of the Chinese group in other possible business, said the first and third sources.

Despite some major Chinese financial institutions have dug in its heels in Brazil in recent years, the returns on investments were below expectations amid increased legal and accounting issues.
The Pengxin is acting carefully in the process of buying a bank, after purchases of financial institutions by other Chinese groups in Brazil have faced obstacles, sources said.

China Construction Bank is injecting $ 217 million in CCB Brazil, formerly known as Industrial & Commercial Bank (Bicbanco) and bought two years ago. The CCBC has confirmed the capital increase in a statement to Reuters.

Jair Ribeiro, chief executive of Indusval and fifth largest shareholder of the bank, had meetings with representatives of Pengxin twice in recent months in China and Brazil, said the first source. He did not respond to several requests for comment on this story.