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One of BBVA’s biggest shareholders has sold its entire stake over the Spanish bank’s decision to pursue a hostile bid for domestic rival Banco Sabadell.
GQG Partners, which is a big investor in several European banks, was a top-five shareholder in BBVA but sold out this summer after telling the bank’s management team it opposed their contentious attempt to buy Sabadell, according to people familiar with the conversations.
BBVA’s €10bn bid for Sabadell, which would be the largest European bank takeover for several years, has met with fierce resistance from the Sabadell board and the Spanish government.
BBVA chair Carlos Torres has pressed ahead with the bid despite the prospect of a drawn-out process that would need to clear several regulatory hurdles.
In July, BBVA shareholders voted 96 per cent in favour of a €10bn share issue to facilitate the bid. But GQG had by that time decided to sell up, having told the bank’s management team that it believed the Sabadell bid would be too time-consuming and distracting, while also diluting its exposure to emerging markets.
“What we liked about BBVA was they actually had divested their US and some other Latin American assets,” said Brian Kersmanc, a portfolio manager at GQG. “They had come back to their core focus. They were really good in Mexico, Turkey and Spain.
“They are doing good enough on an organic basis, just outcompeting organically.”
Mexico, a fast-growing but unpredictable market, delivered 56 per cent of BBVA’s net profit in the first quarter of 2024.
BBVA did not comment on GQG’s disposal, but said: “The overwhelming support from our shareholders at [July’s] general meeting is the clearest signal of their endorsement of the Banco Sabadell transaction.
“We believe this is one of the most compelling projects in European banking.”
A combination between BBVA and Sabadell would create the second-biggest player in Spain’s loan market, leapfrogging Santander.
BBVA wants to make its formal tender offer to Sabadell shareholders before the end of this year. But despite BBVA winning investor support for the share issue, the bid faces other obstacles, including a crucial Spanish antitrust review and the opposition of Spain’s Socialist-led government, which has vowed to prevent BBVA from merging the banks even if it succeeds in acquiring Sabadell.
The deal also needs to be approved by Spain’s financial regulator, which has said BBVA must tell investors what would happen if the government blocks the merger. If the acquisition is a success, the earliest the transaction would be completed is the start of 2025, though it could drag in to the summer.
GQG, which is based in Florida and founded by former Vontobel star fund manager Rajiv Jain, bought a 3 per cent stake in BBVA three years ago, making it the bank’s third-biggest shareholder. As recently as June this year, GQG was still a top-five shareholder, according to S&P Capital IQ data.
GQG built up a top-10 position over the summer in Germany’s Commerzbank, which is the subject of a potential bid from Italian rival UniCredit. It is also a top-10 investor in CaixaBank, Spain’s biggest lender by loan market share.
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