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Pedestrians pass by the Scotiabank location near Yonge and Bloor Streets in Toronto.Kevin Van Paassen/The Globe and Mail

Bank of Nova Scotia is expanding further in Colombia with the purchase of a majority stake in one of the country's largest pension fund companies.

The deal, announced early Tuesday, will see Canada's third-largest bank buy a 51-per-cent stake in Bogota-based Colfondos AFP for an undisclosed price.

The move is part of a broader expansion Scotiabank is undertaking in Colombia as it looks to build upon its South American operations and position itself to capitalize on the country's emerging economic growth.

The stake in Colfondos, which has $9.25-billion (U.S.) of assets under management, is the third acquisition Scotiabank has made in Colombia in the past two years.

In November, Scotiabank purchased a majority stake in Banco Colpatria, Colombia's fifth-largest retail bank, for $1-billion in cash and shares.

That deal, which closed in January, came after Scotiabank purchased a small collection of wholesale lending assets in Colombia from Royal Bank of Scotland in 2010. The deal gave the Canadian bank a larger presence in financing Colombia's energy and mining sectors.

Scotiabank, which is Canada's most internationally focused lender with operations in dozens of countries from Asia to Central America, has pinpointed its wealth management business as an operation it wants to grow around the world.

"Expanding global wealth management's footprint in Latin America is a strategic priority for Scotiabank and the acquisition of a majority stake in Colfondos will increase our regional presence in this segment," Chris Hodgson, Scotiabank's head of global wealth management, said in a statement. "We look to continue the growth and expansion of this business."

The Colfondos deal requires regulatory approval. The price tag was not material, Scotiabank said. The remaining 49 per cent of the pension fund is owned by Mercantil Colpatria.

Scotiabank has had its eye on Colombia for several years, hoping to take advantage of the country's economic rebirth after years of political turmoil. Colombia is attracting increased foreign investment as the government improves security measures and infrastructure, allowing for more economic development. Canada, the European Union and the United States have all recently inked trade deals with Colombia.

The country is attractive for several reasons, including its infrastructure expansion and youthful population. Divided by mountain ranges, it lacks a national railway system and highway grid, but the government has pledged to begin constructing a modern transportation network. The country's population of 45 million is also young, mostly urban and provides ample room for the financial sector to grow.

"We continue to invest in Colombia because we see this as a market with great potential for growth," said Brian Porter, Group Head of International Banking at Scotiabank. "A presence in the retail space through Banco Colpatria and now the wealth market through Colfondos provides great opportunity for Scotiabank and Mercantil Colpatria to realize organic growth."

Scotiabank owns stakes in other pension fund companies in the region, including Profuturo AFP in Peru, and Scotia Crecer AFP in the Dominican Republic.

"We are very pleased to work with Scotiabank, with their proven experience and success in wealth management," Colfondos AFP president Alcides Vargas Manotas said in a statement announcing the deal.

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