Title: Colombian Financial Markets
1Colombian Financial Markets
Ministerio de Comercio, Industria y
Turismo República de Colombia
2Contents
- I. Colombia at a glance
- II. Macroeconomic figures
- III. Financial Sector overview
- IV. Private Equity Funds in Colombia
- V. Conclusions
3General Information
Colombia at a glance
4Colombias economic growth has outpaced the
region's in the last few years
Macroeconomic figures
5Macroeconomic figures
Inflation Rate
Inflation Rate (1998 2007)
Source DANE
6Colombias 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
7Macroeconomic figures
COLOMBIA Economic Growth by sector
Source DANE
8Macroeconomic figures
Foreign Direct Investment vs. GDP
2005 includes SAAB Millers acquisition of
Bavaria for US5.525 bill Source Central Bank,
DANE
9Macroeconomic figures
Foreign Direct Investment by sector
Financial establishments was the third
sector with the most growth in 2007
Source Central Bank
10Financial 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
11Financial sector overview
Financial Sector returns
Source Finance Superintendence, results to Nov
2007
12Financial 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
13Advances 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.
14Financial 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
15Financial sector overview
Colombian capital markets- Market Cap
Market Capitalization (2002 2007)
ECOPETROL IPO
Source Valores Bancolombia BVC
16Financial sector overview
Top Banks in Colombia
17Private 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.
18Where 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
19Private Equity Funds in Colombia
Private Equity Funds in Colombia
20Private 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.
21LAEFM
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
22Private 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.
23Private 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.
24Private 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
25Private 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)
26Private 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
27Inverlink
- 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
28Altra
- 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
29Andes 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
30Conclusions
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
31Proexports 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
32Proexports offices overseas
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