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ProExport Colombia: Colombian Financial Markets


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ProExport Colombia: Colombian Financial Markets

  1. 1. Colombian Financial Markets Ministerio de Comercio, Industria y Turismo República de Colombia
  2. 2. Contents <ul><li>I. Colombia at a glance </li></ul><ul><li>II. Macroeconomic figures </li></ul><ul><li>III. Financial Sector overview </li></ul><ul><li>IV. Private Equity Funds in Colombia </li></ul><ul><li>V. Conclusions </li></ul>
  3. 3. General Information Colombia at a glance <ul><li>Official name: Republic of Colombia </li></ul><ul><li>Capital : Bogota, 7 Million </li></ul><ul><li>GDP (2007) USD 172,000 Million </li></ul><ul><li>Population (2007): 43.9 Million (77% urban, 23% rural) </li></ul><ul><li>GDP per capita (2007): USD 3,918 </li></ul><ul><li>GDP per capita at PPP (2007): USD 9,300 </li></ul><ul><li>GDP Growth (2007): 7.52% </li></ul><ul><li>Inflation (2007): 5.69% </li></ul><ul><li>Exports (2007): USD 29,991 Million </li></ul><ul><li>Imports (2007) : USD 32,899 Million </li></ul><ul><li>FDI (2007): USD 9,028 Million </li></ul><ul><li>Literacy rate: 92.1% </li></ul><ul><li>Currency: Colombian Peso (COP) </li></ul>GDP: Current prices Source: Central Bank, Proexport and Presidency of Colombia Exchange Rate: USD 1 = COP $2014 (2007 Average rate)
  4. 4. Colombia’s economic growth has outpaced the region's in the last few years Macroeconomic figures GDP Growth: Colombia vs. Latin America (1999 – 2007) % Source: Economic Commission for Latin America and the Caribbean (ECLAC), DANE, Forecasts ECLAC and National Planning Department, and World Economic Forum for Latin America in 2007
  5. 5. Inflation Rate Source: DANE Inflation Rate (1998 – 2007 ) Macroeconomic figures
  6. 6. Colombia’s significant market potential 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 Macroeconomic figures
  7. 7. COLOMBIA: Economic Growth by sector % Source: DANE Macroeconomic figures 10.62 8.9 12.1 14.5 10.8 Manufacturing 3.2 -8.4 -1.7 17.8 12.9 Housing & Commercial 8.26 3.5 15.7 5.0 1.4 Financial services 12.4 10.9 12.1 10.3 9.8 Transportation 3.0 5.0 1.8 0.4 2.2 Social services 6.9 10.8 18.2 6.2 1.8 4.8 2.8 II Trim 2007 Sector 2006 I Trim 2007 III Trim 2007 2007 Agriculture 2.3 1.9 2.2 2.55 Mining 0.1 -0.5 3.5 4.5 Electricity, gas, water 3.0 3.8 1.9 2.34 Construction 14.6 27.1 2.6 13.31 Public Works 17.2 39.9 19.6 28.2 Retail, rest, hotels 11.1 11.6 9.9 10.4 Total GDP 6.8 8.1 6.7 7.52
  8. 8. Foreign Direct Investment vs. GDP * 2005 includes SAAB Miller´s acquisition of Bavaria for US$5.525 bill Source: Central Bank, DANE Macroeconomic figures
  9. 9. Foreign Direct Investment by sector Source: Central Bank Financial establishments was the third sector with the most growth in 2007 Macroeconomic figures
  10. 10. Financial Sector establishments <ul><li>The finance superintendence monitors the following financial establishments: </li></ul><ul><ul><ul><ul><li>Insurance Companies & Insurance Brokers </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Credit establishments (Banks) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Securities brokerage & agents </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Pension funds & fiduciaries </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Portfolio Investments </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Private equity funds </li></ul></ul></ul></ul></ul>Financial sector overview
  11. 11. Financial Sector returns Source: Finance Superintendence, results to Nov 2007 Financial sector overview
  12. 12. Financial System Depth <ul><li>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. </li></ul><ul><li>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. </li></ul>Financial Depth (Accts.Rec/GDP) Source: Asobancaria, Central Bank Financial sector overview
  13. 13. Advances in Corporate Regulation <ul><li>There are no restrictions to invest in the financial sector in Colombia . </li></ul><ul><li>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 </li></ul><ul><li>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. </li></ul><ul><li>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. </li></ul>Financial sector overview
  14. 14. <ul><li>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. </li></ul>Colombian capital markets Source: Valores Bancolombia & BVC Financial sector overview
  15. 15. Colombian capital markets- Market Cap Market Capitalization (2002 – 2007 ) ECOPETROL IPO Source: Valores Bancolombia & BVC Financial sector overview
  16. 16. Top Banks in Colombia Financial sector overview 100,0% 79.333 159.787.916 Total 0,4% 304 611.911 ABN Amro 1,2% 918 1.848.621 HSBC 2,8% 2.255 4.541.192 Av Villas 2,9% 2.295 4.623.372 Santander 2,9% 2.321 4.674.967 Crédito 3,1% 2.422 4.878.900 GNB Sudameris 3,4% 2.673 5.382.921 Citibank 3,6% 2.866 5.771.992 Colpatria 3,9% 3.114 6.272.608 BCSC 5,2% 4.101 8.259.748 Popular 6,2% 4.948 9.965.042 Banco Agrario 6,8% 5.395 10.866.593 Occidente 10,9% 8.660 17.442.833 BBVA 12,1% 9.560 19.254.951 Davivienda 13,9% 11.020 22.196.430 Bogotá 20,8% 16.481 33.195.831 Bancolombia Market Share Assets (US$ millions) Assets (COP $ millions) Bank Name
  17. 17. <ul><li>Following several years of good economic performance, PE funds are now looking to invest their capital in Colombia </li></ul><ul><li>EMPEA’s 2007 fundraising statistics show that private equity funds investing in emerging markets raised US$59 billion in fresh capital in 2007, which represented a 78% increase over the amount raised in 2006 (US$33 billion) </li></ul><ul><li>Emerging markets have become a primary focus for PE funds looking for new opportunities and greater returns. </li></ul>Private Equity Funds looking at Colombia Private Equity Funds in Colombia
  18. 18. Where are PE funds looking to invest? Latin American countries where investors are willing to focus investments in the next 2 years: Source: 2008 Annual Latin America Private Equity Survey by KPMG, February 2008 Colombia ranks third, after Brazil and Mexico, which have traditionally been at the top... Private Equity Funds in Colombia
  19. 19. Private Equity Funds in Colombia Private Equity Funds in Colombia LAEFM ALTRA Andes Capital
  20. 20. <ul><li>Branch of SEAF in Washington D.C, manages Private Equity Funds throughout the world. </li></ul><ul><li>Specializes in investing in small and medium sized private companies in emerging markets </li></ul><ul><li>In Colombia, SEAF manages the following fund: </li></ul><ul><li>Fondo Transandino Colombia FCP </li></ul><ul><li>Created in Dec ’05: First diversified PE fund in Colombia. Manages approx. US$ 17 million and invests in companies in various industries:, such as: </li></ul>Financial services. The company has doubled in size since SEAF`s investment. Sport & Medical center with over 25 locations in Colombia. With SEAF`s support, the company will create 60 locations in the country, and expand regionally. SEAF Colombia Private Equity Funds in Colombia
  21. 21. LAEFM <ul><li>Private equity fund that started operations in 1995. </li></ul><ul><li>Managed by Latin America Enterprise Fund Managers, L.L.C. (“LAEFM”), a Delaware company based in Miami </li></ul><ul><li>Committed resources of US$ 410 million which are fully invested in the largest Latin American countries (Mexico, Brazil, Colombia, Chile, Peru, Venezuela and Argentina). </li></ul><ul><li>LAEFM Colombia Ltda is a subsidiary of LAEFM, and has made investments in: </li></ul><ul><ul><ul><ul><ul><li>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. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Cine Colombia : investment of US$20.8 million in 1997. Sold to current owners in 2005 </li></ul></ul></ul></ul></ul>Private Equity Funds in Colombia
  22. 22. <ul><li>Tribeca invests in companies with high growth potential, by acquiring all or part of the company`s shares. </li></ul><ul><li>Tribeca has concentrated its investments in Colombia for its strong economic performance, improvement in security levels, and stability of institutions </li></ul><ul><li>It has also established a local PE fund called Tribeca Fund I that currently manages approx. US$115 million. The fund is in its closing stage and minimum investment was US$ 1 million </li></ul><ul><li>Some of Tribeca`s investments include: </li></ul>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. Tribeca Partners Private Equity Funds in Colombia
  23. 23. <ul><li>Private equity investment firm focused in the electric power industry in Latin America and the Caribbean. </li></ul><ul><li>Created in 2003. Manages the funds formerly known as Scudder Latin American Power Funds which were launched by Scudder, Stevens & Clark in 1993. </li></ul><ul><li>Conduit has three funds: Latin Power I, II, & III </li></ul><ul><li>Conduit invested in three Colombian thermoelectric plants during the 90´s. It liquidated these investments during 2006 and 2007 with total proceeds from sales of more than US$200 million, and quarterly IRR returns of above 15%. </li></ul>Conduit Capital Partners Private Equity Funds in Colombia
  24. 24. <ul><li>Global Emerging Markets (&quot;GEM&quot;) 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. </li></ul><ul><li>GEM and Banco Colpatria are currently structuring a deal to jointly create a $220 million private equity fund. </li></ul><ul><li>The fund will make capital placements by acquiring either control or minority interests in small/medium sized companies in Colombia in different sectors. </li></ul><ul><li>Its estimated close is June 2008 </li></ul>GEM- Global Emerging Markets Private Equity Funds in Colombia
  25. 25. <ul><li>Leading global private equity fund manager focused in investments in small to mid-cap enterprises </li></ul><ul><li>Invests in businesses with proven track records and helps them reach their full potential </li></ul><ul><li>Aureos has 3 funds that invest in Latin America (including Colombia): </li></ul>Aureos Capital Private Equity Funds in Colombia Fund Name Aureos Central American Fund Aureos Latin America Fund Emerge Central America Growth Fund Geography Panama, Nicaragua, El Salvador, Guatemala, Honduras, Costa Rica & Dom.Rep Panama, Nicaragua, El Salvador, Guatemala, Honduras, Costa Rica, Mexico, Peru, Bolivia, Colombia & Dom.Rep Panama, Nicaragua, El Salvador, Guatemala, Honduras, Costa Rica, Belize & Dom.Rep Vintage Year 2002 2007 2006 Target Capital US$36.3 MM US$300 MM US$21 MM Commited Capital US$140 MM US$21 MM Status Divesting Investing & fundraising Investing
  26. 26. <ul><li>Global asset manager with approx. US$95 billion of assets </li></ul><ul><li>Focused on Property, Power, Timber, Infrastructure, Equities & Fixed Income assets. </li></ul><ul><li>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 </li></ul>Brookfield Private Equity Funds in Colombia
  27. 27. Inverlink <ul><li>Specializes in M&A, but recently started a PE fund in Colombia that invests in infrastructure </li></ul><ul><li>The fund is in its closing stage, and will be approximately US$500-$600 million in size. Minimum investment of US$5 million </li></ul><ul><li>The fun manager will be constituted by Inverlink and an international funds manager (being selected right now) </li></ul><ul><li>The fund will focus its investments in the following areas: </li></ul><ul><ul><ul><ul><ul><li>Electric generation </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Energy transmission </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Road infrastructure </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Ports </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Airports </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Transport </li></ul></ul></ul></ul></ul>
  28. 28. Altra <ul><li>Establishing new PE fund, currently in fund raising stage. </li></ul><ul><li>The fund size will be approximately US$150 million. Minimum investment of US$500,000 </li></ul><ul><li>Oportunistic focus in the following sectors: </li></ul><ul><ul><ul><ul><ul><li>Cosmetics & beauty products </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Services </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Consumption </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Outsourcing, BPO </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Biofuels </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Hotels </li></ul></ul></ul></ul></ul>
  29. 29. Andes Capital <ul><li>The fund will invest in small to medium size companies with growth potential </li></ul><ul><li>The size of the fund is expected to be approximately US$50 million </li></ul><ul><li>Minimum investment is US$250,000 </li></ul><ul><li>The fund will focus on the following sectors: </li></ul><ul><ul><ul><ul><ul><li>Technology and telecommunications </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Tourism </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Food and franchise </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Helath and wellness </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Renewable Energy </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Cold chain, logistics </li></ul></ul></ul></ul></ul>
  30. 30. Conclusions <ul><li>For many years Colombia hadn't been at the top of investor's plans for investing in Latin America… </li></ul><ul><li>The current situation has changed due to a stronger economic performance, considerable improvements in safety and global perception. </li></ul><ul><li>Nowadays, Colombia is the third most desirable destination for foreign investors bringing new capital </li></ul><ul><li>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 </li></ul>Conclusions
  31. 31. Proexport´s services to investors <ul><li>The Colombian government focuses in generating favorable conditions and offering the best support to investors. Proexport, the Government´s Investment Promotion Agency offers services to foreign investors that range from: </li></ul><ul><ul><li>Information requests (economic, sector specific information, legal, procedural, etc) </li></ul></ul><ul><ul><li>Contacts with public and private sectors </li></ul></ul><ul><ul><li>Set up of agendas when investors decide to visit Colombia </li></ul></ul><ul><ul><li>Aftercare services for investors that are already established in the country </li></ul></ul><ul><ul><li>Assessment and improvement of business climate </li></ul></ul><ul><ul><li>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 </li></ul></ul>
  32. 32. Proexport´s offices overseas