Investment in Private Equity Funds

Private Equity Funds

Colombia has a diversified economy with macroeconomic stability, favorable growth prospects in the long term, a solid business foundation supported by its skilled workforce and a growing middle class with access to financial services. These aspects make the country an attractive destination for private equity funds who are looking for new investment opportunities.

Acording to the 2015 LAVCA Scorecard on the Private Equity and Venture Capital Environment, Colombia maintained its fourth place among 12 Latin American and Caribbean countries due to its favorable conditions for development of the PEF industry.

There is government support with the Bancóldex Capital program, created to promote and develop the private equity industry in Colombia, and with the Colombian Association of Capital Funds (COLCAPITAL), created by Bancoldex and the Multilateral Investment Fund of the Inter-American Development Bank, to promote and strengthen the private equity industry in Colombia.

Private Equity funds are clearly a very important financing alternative for Colombian entrepreneurs.

  • Colombia accounted for 1% of all total funds raised in Private Equity and Venture Capital in Latin America, and this in turn accounted for 5% globally.
  • According to LAVCA, one of Colombia's strengths is its attractive regulatory framework for the establishment and management of private capital funds.
  • There is an excellent opportunity to procure local equity resources from institutional investors such as in pension funds and insurance companies, which have shown great returns in the last few years.
  • The Latin American Integrated Market (MILA), formed by the stock exchanges of Colombia, Chile and Peru, has become an excellent exit strategy for private equity funds, offering a greater diversification to investors and access to the capital market.

 

These are only some of the reasons to invest in private equity funds, read on to learn more details of these and further reasons to make Colombia the destination for your investment.

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Investment in Private Equity Funds 20164.03 MB

OPPORTUNITIES FOR CREATION AND MANAGEMENT OF PRIVATE EQUITY FUNDS IN COLOMBIA

 

  • The International Monetary Fund (IMF) projected that the Colombian economy will grow by 2.5% in 2016, beating countries such as Mexico (2.4%), Chile (1.5%), Argentina (-1,0%), Brazil    (-3.8%), Venezuela (-8.0%), and the average for the region (-0.5%).
  • In 2015, Colombia ranked 4th among 12 Latin American and Caribbean countries because of its favorable conditions to finance the private equity funds industry. (LAVCA)
  • Colombia offers: a dynamic and stable economy, a growing market located strategically to facilitate business transactions with the region, a trade platform with over 13 Trade Agreements enabling investors to reach third markets with preferential access and multiple development centers and regions coupled.
  • Colombia has a growing middle class and the percentage of the adult population with access to financial products is 72.5%. (Fedesarrollo and Superbancaria)
  • According to the IMD ranking for 2015, Colombia has the best-trained labor force in South America. Colombia beat countries such as Brazil, Chile, Peru, Argentina and Venezuela, among others in the region.
  • The country is internationally recognized for the protection it offers to investors, and is ranked 14th in the world and 1st among Latin American countries. (Doing Business, 2016)

 

MULTI SECTORAL INVESTMENT OPPORTUNITIES

 

  • Colombia has a diversified economy with investment opportunities in different sectors such as infrastructure, real estate, oil and gas, energy, tourism, health, forestry, agribusiness, ICT and others.
  • Colombia has investment opportunities for small and medium sized enterprises in expansion and consolidation stages, which are mainly concentrated in commerce, services and industry sectors.
  • According to the National Association of Financial Institutions (ANIF), the investment potential in these companies is due to the availability of labor and its contribution to growth. Micro, small and medium companies make up 81% of the workforce and contribute on average 40% of the country’s GDP.
  • For private equity funds have been identified investment opportunities in the sectors of health, Software and IT, tourism infrastructure, micro finances, IT agriculture, energy, infrastructure and innovation projects, where equity funds have already participated.

 

INVESTMENT OPPORTUNITIES WITH PRIVATE EQUITY FUNDS CREATED IN COLOMBIA AND THE AVAILABILITY OF LOCAL CAPITAL

  • According to ColCapital, there are 57 equity funds; the number has grown at a compound annual rate of 44.5% between 2005 and 2014.
  • The committed capital of these funds is an important financial option for Colombian companies. US$3,228 million have been invested and more than US$7,442 million in committed capital for investments in coming years. The Capital available is US$4,215 million.
  • Changes in regulations have allowed Pension Funds and insurance companies be able to invest in private equity funds. In Colombia, there are five private pension funds (Protección, Porvenir, Colfondos, Skandia and Horizonte), 24 general insurance companies and 19 life insurance companies

 

Regions

There are opportunities to invest in Private Equity Funds in every region of Colombia, especially in:

Success Stories

  • The Abraaj Group: firm leader in investments in emerging markets, The Abraaj Group manages US$7.5 billion in assets, operating through over 30 offices in Asia, Africa, Latin America and the Middle East.  Colombian companies in which the fund has invested: Rentandes, IASA, Docuformas, R & D Biopharmaceutical and Metronet.
  • SEAF It is a global leading company in emerging markets by investing in small and medium enterprises (PYMES) Among its investments include companies recognized as: Andrés Carne de Res, Bodytech and  Clínica las Americas.
  • Brilla Group: is a private equity firm focused on the luxury beachfront hotel and resort asset class. Their portfolio includes the Brilla Colombia Private Equity Fund, which has investment commitments from local pension funds and institutions and they will invest exclusively in the Colombian luxury beachfront hotel asset class. The biggest investment in Colombia has been the Hyatt Regency hotel in Cartagena.
  • DARBY Private Equity: the company has two sponsors: Darby Overseas, and Grupo Colpatria. FINTRA, the fund managed by the General Partner, invest in infrastructure i Colombia, Panama, Peru y Costa Rica Mainly infrastructure investments. Investments in Colombia have been focused on companies like Intertug and Ocensa.
  • Advent International: focuses on international buyouts, strategic repositioning opportunities and growth buyouts. Through its buyout programs it has completed over 270 transactions in 35 countries.

These are just some of the reasons to invest in Private Equity Funds, read on to learn in further detail these and more reasons to make Colombia the destination for your projects.

Investment Specialist:
María Paula Gómez

Juan Pérez

In PROCOLOMBIA we attend to companies, legal persons and national entities and foreigners who are interested in the direct investment in Colombia.

For the nature of our activities, we do not attend to requirements of investment of natural persons.

We suggest you review our Frequently Asked Questions on Investment in Colombia before you send us your inquiries.

If You are a corporate investor, please fill out our contact form.

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