Private equity funds
The private equity industry in Colombia, with more than 122 active funds, amounts to US $16.895 billion. Private equity investments in Colombia are directed to various economic sectors particularly in energy, real estate, services, and infrastructure.
Why private equity funds should invest in Colombia?
Colombia provides stability for investors
- A stable macroeconomic management and political stability has created a favorable investment climate in Colombia.
- The Colombian economy is the fourth largest in the region, with an average GDP growth of 3.7% between 2010 and 2019, which is higher than the regional average. https://www.bancomundial.org/
- Furthermore, inflation has hovered around the 3% target in the past three years. https://www.imf.org/external/spanish/index.htm
The dynamics of the private equity fund industry in Colombia
- The private equity industry is considered a high potential segment, which has performed significant growth since its inception in the country. https://colcapital.org/
- Theindustry experienced a compound annual growth of 23.6% between 1995-2018, with available capital commitments amounting to US $5.688 billion and invested capital levels of US $10.315 billion in 2018. https://colcapital.org/
Colombia’s business fabric is strong
- Colombia has a robust local business fabric, which offers growth funds significant investment opportunities in a diverse pool of sectors . The country registered 738,981 companies in 2019, several of them are currently multi- latin companies, the local term to depict regional multinationals. http://www.rues.org.co/
Raising capital in Colombia
- Colombia has local capital availability as well as it offers access to capital markets. Pension and severance funds, insurance companies and corporate investors are sources of capital in the country. In addition, within the framework of the Pacific Alliance and the Funds Passport initiative, the country can also access capital sourfes from other member states within this bloc. https://colcapital.org/; https://procolombia.co/
Benefits offered by Colombia
- The Colombian Government understands the importance of attracting private equity investment funds, which is why the country has had an exclusive regulatory framework since 2019 for this type of vehicles, in order to promote the creation of local funds. It is worth noting that private equity funds are not legal entities and are therefore not subject to income tax.
Investment opportunities for private equity funds:
- Infrastructure: as a post emergency recovery measure, the Government has prioritized several infrastructure Public-Private Partnership investments amounting to US $5.288 billion, which will generate more than 90,000 jobs between 2020 and 2022. In addition to 5G projects, Colombia offers a dynamic secondary infrastructure market, which allows Foreign Investment Capital Funds influx for existent projects offering stable and secure profitability.
- Energy: thanks to Colombia’s environmental conditions and geographic position, the country enjoys great potential for the development of hydroelectric, thermoelectric, and non-conventional renewable sources for energy generation ( such as solar, wind, geothermal ).
- Tourism: The 2019 economic growth law offers preferential income tax rates for hotels, theme parks, agritourism, ecotourism, and new docks.
- Agricultural products & Food production
- Healthcare services and life sciences
- Hospitality and tourism infrastructure
- Information technology and creative industries
- Manufacturing industries
- Private equity and venture capital
- Real Estate