The deal, which is expected to close in the first quarter of 2018, will make Principal the fifth-largest pension provider in Mexico, said a joint news release from Principal and MetLife. Financial terms of the deal were not disclosed.
Principal Afore, Principal's existing pension fund business in Mexico, had $7.7 billion in assets under management as of Sept. 30, and MetLife Afore had $4 billion, a Principal spokeswoman said in an email.
"The MetLife Afore team will be integrated into the Principal Afore team," the spokeswoman said.
"As the middle class in emerging markets continues to grow, there is increasing demand for long-term retirement and investing products that enable individuals to retire with the highest pension possible," said Roberto Walker, president, Principal International Latin America, in the release. "This acquisition strengthens our commitment to Mexico's pension market."
Oscar Schmidt, executive vice president and head of MetLife's Latin America region added: "The divestiture of MetLife Afore will allow us to enhance our focus on growing our leading insurance business in Mexico, where we are the number one provider of life insurance."
BNP Paribas Securities Corp. and Credit Suisse Securities acted as financial advisers to Principal and MetLife, respectively. White & Case and Nader, Hayaux y Goebel acted as legal counsel for Principal and MetLife, respectively.