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Colombian Financial Markets

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Title: Colombian Financial Markets


1
Colombian Financial Markets
Ministerio de Comercio, Industria y
Turismo República de Colombia
2
Contents
  • I. Colombia at a glance
  • II. Macroeconomic figures
  • III. Financial Sector overview
  • IV. Private Equity Funds in Colombia
  • V. Conclusions

3
General Information
Colombia at a glance
4
Colombias economic growth has outpaced the
region's in the last few years
Macroeconomic figures
5
Macroeconomic figures
Inflation Rate
Inflation Rate (1998 2007)
Source DANE
6
Colombias significant market potential
Macroeconomic figures
GDP in Latin America (2007) Current Prices, USD
Billion
Population in Latin America (2007) Million of
inhabitants
Source International Monetary Fund and World
Bank 2007
7
Macroeconomic figures
COLOMBIA Economic Growth by sector
Source DANE
8
Macroeconomic figures
Foreign Direct Investment vs. GDP
2005 includes SAAB Millers acquisition of
Bavaria for US5.525 bill Source Central Bank,
DANE
9
Macroeconomic figures
Foreign Direct Investment by sector
Financial establishments was the third
sector with the most growth in 2007
Source Central Bank
10
Financial Sector establishments
Financial sector overview
  • The finance superintendence monitors the
    following financial establishments
  • Insurance Companies Insurance Brokers
  • Credit establishments (Banks)
  • Securities brokerage agents
  • Pension funds fiduciaries
  • Portfolio Investments
  • Private equity funds

11
Financial sector overview
Financial Sector returns
Source Finance Superintendence, results to Nov
2007
12
Financial System Depth
Financial sector overview
  • Up until September 2007, the levels of
    bancarization in Colombia were 36.6, meaning
    that 36.6 of the population has access to at
    least one financial service.
  • With only 36.6 of the population having access
    to some level of banking service, it leaves an
    enormous opportunity for new existing players
    to conquer the rest of this market.

Financial Depth (Accts.Rec/GDP)
Source Asobancaria, Central Bank
13
Advances in Corporate Regulation
Financial sector overview
  • There are no restrictions to invest in the
    financial sector in Colombia.
  • The formation of private equity funds (carteras
    colectivas) in Colombia was established by Decree
    2175 in 2007. These will basically be any
    collection of funds or other assets of two or
    more people that will be invested collectively
    and will give collective economic results
  • Establishment of private equity funds that invest
    in unlisted companies or in mixed portfolios.
    This was allowed when Resolution 470 of June 2005
    entered into effect in 2006. One fund was
    established in 2006 under the framework,
    administered by the Finance Superintendence,
    another was close to becoming registered at
    end-2006 and another five were seeking
    registration.
  • Pension funds may invest up to 20 of their
    portfolios in private equity funds. Under
    Resolution 275 of 2001 and modifications made to
    it in more recent years, this restriction was
    lifted.

14
Financial sector overview
Colombian capital markets
  • Capital markets in Colombia are very young, and
    for the moment only a few entities are the main
    players in it. The government along with private
    companies is making an effort to promote the use
    of equity, and other capital tools as well as the
    growth of the stock exchange and derivatives
    market, and benefit the economy from their
    development.

Source Valores Bancolombia BVC
15
Financial sector overview
Colombian capital markets- Market Cap
Market Capitalization (2002 2007)
ECOPETROL IPO
Source Valores Bancolombia BVC
16
Financial sector overview
Top Banks in Colombia
17
Private Equity Funds in Colombia
Private Equity Funds looking at Colombia
  • Following several years of good economic
    performance, PE funds are now looking to invest
    their capital in Colombia
  • EMPEAs 2007 fundraising statistics show that
    private equity funds investing in emerging
    markets raised US59 billion in fresh capital in
    2007, which represented a 78 increase over the
    amount raised in 2006 (US33 billion)
  • Emerging markets have become a primary focus for
    PE funds looking for new opportunities and
    greater returns.

18
Where are PE funds looking to invest?
Private Equity Funds in Colombia
Latin American countries where investors are
willing to focus investments in the next 2 years
Colombia ranks third, after Brazil and Mexico,
which have traditionally been at the top...
Source 2008 Annual Latin America Private Equity
Survey by KPMG, February 2008
19
Private Equity Funds in Colombia
Private Equity Funds in Colombia
20
Private Equity Funds in Colombia
SEAF Colombia
  • Branch of SEAF in Washington D.C, manages
    Private Equity Funds throughout the world.
  • Specializes in investing in small and medium
    sized private companies in emerging markets
  • In Colombia, SEAF manages the following fund
  • Fondo Transandino Colombia FCP
  • Created in Dec 05 First diversified PE fund in
    Colombia. Manages approx. US 17 million and
    invests in companies in various industries, such
    as

Financial services. The company has doubled in
size since SEAFs investment. Sport Medical
center with over 25 locations in Colombia. With
SEAFs support, the company will create 60
locations in the country, and expand regionally.
21
LAEFM
Private Equity Funds in Colombia
  • Private equity fund that started operations in
    1995.
  • Managed by Latin America Enterprise Fund
    Managers, L.L.C. (LAEFM), a Delaware company
    based in Miami
  • Committed resources of US 410 million which are
    fully invested in the largest Latin American
    countries (Mexico, Brazil, Colombia, Chile, Peru,
    Venezuela and Argentina).
  • LAEFM Colombia Ltda is a subsidiary of LAEFM, and
    has made investments in
  • Colombian Hydrocarbons Fund (US 62 million)
    Invests in exploration and production of minor
    fields in Colombia. The fund started operations
    in 2005 and already has two oil discoveries. Its
    main investors are local pension funds, ECOPETROL
    and local oil companies.
  • Cine Colombia investment of US20.8 million in
    1997. Sold to current owners in 2005

22
Private Equity Funds in Colombia
Tribeca Partners
  • Tribeca invests in companies with high growth
    potential, by acquiring all or part of the
    companys shares.
  • Tribeca has concentrated its investments in
    Colombia for its strong economic performance,
    improvement in security levels, and stability of
    institutions
  • It has also established a local PE fund called
    Tribeca Fund I that currently manages approx.
    US115 million. The fund is in its closing stage
    and minimum investment was US 1 million
  • Some of Tribecas investments include

Home pre- and post-hospital care, medical
consultations, and emergency services. Designs,
manufactures, and sells high-end swimwear to
international markets. Medical homecare service
that offers technology and modern mobile
intensive care units for house calls and medical
emergencies in Bogotá.
23
Private Equity Funds in Colombia
Conduit Capital Partners
  • Private equity investment firm focused in the
    electric power industry in Latin America and the
    Caribbean.
  • Created in 2003. Manages the funds formerly known
    as Scudder Latin American Power Funds which were
    launched by Scudder, Stevens Clark in 1993.
  • Conduit has three funds Latin Power I, II, III
  • Conduit invested in three Colombian
    thermoelectric plants during the 90s. It
    liquidated these investments during 2006 and 2007
    with total proceeds from sales of more than
    US200 million, and quarterly IRR returns of
    above 15.

24
Private Equity Funds in Colombia
GEM- Global Emerging Markets
  • Global Emerging Markets ("GEM") was founded in
    1991. The firm is a 2.7 billion alternative
    investment group that manages a diverse set of
    investment vehicles focused on emerging markets
    across the world.
  • GEM and Banco Colpatria are currently structuring
    a deal to jointly create a 220 million private
    equity fund.
  • The fund will make capital placements by
    acquiring either control or minority interests in
    small/medium sized companies in Colombia in
    different sectors.
  • Its estimated close is June 2008

25
Private Equity Funds in Colombia
Aureos Capital
  • Leading global private equity fund manager
    focused in investments in small to mid-cap
    enterprises
  • Invests in businesses with proven track records
    and helps them reach their full potential
  • Aureos has 3 funds that invest in Latin America
    (including Colombia)

26
Private Equity Funds in Colombia
Brookfield
  • Global asset manager with approx. US95 billion
    of assets
  • Focused on Property, Power, Timber,
    Infrastructure, Equities Fixed Income assets.
  • The Fund has offices in New York, London,
    Toronto, Brazil, and recently opened a
    representative office in Colombia to handle
    investments in the Andean Region

27
Inverlink
  • Specializes in MA, but recently started a PE
    fund in Colombia that invests in infrastructure
  • The fund is in its closing stage, and will be
    approximately US500-600 million in size.
    Minimum investment of US5 million
  • The fun manager will be constituted by Inverlink
    and an international funds manager (being
    selected right now)
  • The fund will focus its investments in the
    following areas
  • Electric generation
  • Energy transmission
  • Road infrastructure
  • Ports
  • Airports
  • Transport

28
Altra
  • Establishing new PE fund, currently in fund
    raising stage.
  • The fund size will be approximately US150
    million. Minimum investment of US500,000
  • Oportunistic focus in the following sectors
  • Cosmetics beauty products
  • Services
  • Consumption
  • Outsourcing, BPO
  • Biofuels
  • Hotels

29
Andes Capital
  • The fund will invest in small to medium size
    companies with growth potential
  • The size of the fund is expected to be
    approximately US50 million
  • Minimum investment is US250,000
  • The fund will focus on the following sectors
  • Technology and telecommunications
  • Tourism
  • Food and franchise
  • Helath and wellness
  • Renewable Energy
  • Cold chain, logistics

30
Conclusions
Conclusions
  • For many years Colombia hadn't been at the top of
    investor's plans for investing in Latin America
  • The current situation has changed due to a
    stronger economic performance, considerable
    improvements in safety and global perception.
  • Nowadays, Colombia is the third most desirable
    destination for foreign investors bringing new
    capital
  • Colombia offers many industries in which this
    capital could be invested, some of which are
    Agribusiness, technology, tourism, renewable
    energy sources, financial services, among others

31
Proexports services to investors
  • The Colombian government focuses in generating
    favorable conditions and offering the best
    support to investors. Proexport, the Governments
    Investment Promotion Agency offers services to
    foreign investors that range from
  • Information requests (economic, sector specific
    information, legal, procedural, etc)
  • Contacts with public and private sectors
  • Set up of agendas when investors decide to visit
    Colombia
  • Aftercare services for investors that are already
    established in the country
  • Assessment and improvement of business climate
  • All services are free of charge. The main
    goal is to make the development of new businesses
    an efficient and friendly process. All
    information provided in the process is handled as
    confidential

32
Proexports offices overseas
33
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