Business Context and Reporting Period
This Form 6-K filing by Grupo Aval Acciones y Valores S.A. (Grupo Aval) reports on a proposed Partial Spin-Off project dated January 31, 2022. The filing details a corporate reorganization where Grupo Aval will spin off its interest in Sociedad Beneficiaria Bogotá S.A.S. (which holds a 75% stake in BAC Holding International Corp., the parent of BAC Credomatic) to a newly formed entity, Sociedad Beneficiaria Aval S.A.S.. The financial data presented covers the period ended November 30, 2021, alongside comparative data for the period ended November 30, 2020, and December 31, 2020.
Key Financial Metrics (as of November 30, 2021)
| Metric | Value (COP Millions) |
|---|---|
| Total Assets | 25,484,838 |
| Total Liabilities | 2,194,993 |
| Shareholders' Equity | 23,289,845 |
| Net Income (11 months) | 3,131,688 |
| Operating Revenue | 3,343,591 |
| Net Cash from Operating Activities | 1,177,232 |
| Cash and Cash Equivalents | 172,833 |
| Outstanding Bonds (Long-term) | 1,124,520 |
| Net Earnings Per Share | 140.55 COP |
Material Changes vs. Prior Period
- Revenue Growth: Total operating revenue increased from 2,332,573 million COP (Nov 2020) to 3,343,591 million COP (Nov 2021), driven primarily by equity method income which rose from 2,069,621 million to 3,080,671 million COP.
- Profitability: Net income grew by approximately 48% year-over-year, rising from 2,119,023 million COP to 3,131,688 million COP.
- Balance Sheet Expansion: Total assets increased by roughly 9.6% to 25.48 trillion COP, largely due to an increase in investments in subsidiaries and associates (from 22.76 trillion to 24.93 trillion COP).
- Dividends: The company declared a cash dividend of 4.50 COP per share per month for the period April 2021 to March 2022, totaling 1,203,175 million COP in distributions.
Guidance, Outlook, and Transaction Details
Spin-Off Structure
The filing outlines a multi-step transaction to separate the BAC Credomatic business unit (held via BAC Holding International Corp.) from Grupo Aval:
- Banco de Bogotá Spin-Off: Banco de Bogotá (68.7% owned by Grupo Aval) will spin off 75% of its stake in BAC Holding to Sociedad Beneficiaria Bogotá S.A.S.
- Grupo Aval Spin-Off: Grupo Aval will subsequently spin off its pro-rata share (approx. 51.5% of BAC Holding) received from the first step to Sociedad Beneficiaria Aval S.A.S.
- Merger: Following the spin-offs, BAC Holding will merge with the beneficiary companies, allowing Grupo Aval shareholders to directly hold shares of BAC Holding.
Valuation and Exchange Ratio
An independent valuation by METRIX determined the exchange ratio. The spun-off equity (100% of Sociedad Beneficiaria Bogotá S.A.S. held by Grupo Aval) is valued at 7,078,150 million COP. The exchange ratio is 1:1; for every share of Grupo Aval held, shareholders will receive one share of Sociedad Beneficiaria Aval S.A.S.
Pro Forma Impact
Upon completion of the spin-off, Grupo Aval's pro forma assets are projected to decrease to 18,507,422 million COP, and equity to 16,312,429 million COP. The transaction is expected to be tax-neutral under Colombian law.
Risks and Contingencies
- Regulatory Approval: The transaction is contingent upon approval by the General Shareholders' Meetings of the participating companies and authorization from the Superintendence of Finance of Colombia (SFC).
- Foreign Shareholders: Shareholders residing abroad who cannot receive shares due to local regulations may receive cash compensation or have shares held in a trust.
- Right of Withdrawal: Management asserts that the right of withdrawal does not apply as the transaction does not impair shareholder equity rights, though dissenting shareholders may exercise this right under Colombian law.
Key Facts for Investor Verification
- Transaction Status: Verify the outcome of the Extraordinary Shareholders' Meeting scheduled for February 4, 2022, and subsequent SFC approvals.
- Valuation Accuracy: Confirm the final independent valuation report by METRIX and the specific exchange ratio approved by shareholders.
- Pro Forma Financials: Review the projected balance sheet to understand the post-spin-off capital structure and debt levels of the remaining Grupo Aval entity.
- Dividend Policy: Monitor the dividend payout policies of the newly separated BAC Holding entity versus the remaining Grupo Aval holding company.
- Listing Details: Verify the listing status of BAC Holding shares on the Colombian Stock Exchange (BVC) and Panama Stock Exchange (Latinex) post-merger.