Colombian Financial Markets

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Colombian Financial Markets
Ministerio de Comercio, Industria y
Turismo República de Colombia
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Contents

• I. Colombia at a glance
• II. Macroeconomic figures
• III. Financial Sector overview
• IV. Private Equity Funds in Colombia
• V. Conclusions

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General Information
Colombia at a glance
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Colombias economic growth has outpaced the
region's in the last few years
Macroeconomic figures
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Macroeconomic figures
Inflation Rate
Inflation Rate (1998 2007)
Source DANE
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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
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Macroeconomic figures
COLOMBIA Economic Growth by sector
Source DANE
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Macroeconomic figures
Foreign Direct Investment vs. GDP
2005 includes SAAB Millers acquisition of
Bavaria for US5.525 bill Source Central Bank,
DANE
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Macroeconomic figures
Foreign Direct Investment by sector
Financial establishments was the third
sector with the most growth in 2007
Source Central Bank
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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

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Financial sector overview
Financial Sector returns
Source Finance Superintendence, results to Nov
2007
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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
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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.

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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
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Financial sector overview
Colombian capital markets- Market Cap
Market Capitalization (2002 2007)
ECOPETROL IPO
Source Valores Bancolombia BVC
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Financial sector overview
Top Banks in Colombia
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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.

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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
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Private Equity Funds in Colombia
Private Equity Funds in Colombia
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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.
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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

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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.
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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.

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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

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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)

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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

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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

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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

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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

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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

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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

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Proexports offices overseas
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