Investment in Private Equity Funds

Private Equity Funds


According to the LAVCA Score Card 2017/2018 (Latin American Private Equity & Venture Capital Association), Colombia maintained the fourth place in the industry in Latin America, after Chile, Brazil and Mexico, presenting an improvement in its rating with respect to 2016, thanks to the progress in regulation, bankruptcy proceedings, creditors rights, partners responsibility and migration to international accounting standards.

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.

  • According to LAVCA, one of the strengths of Colombia is its attractive regulatory framework for the formation and administration of private equity funds.
  • The Integrated Latin American Market (MILA), made up of the stock exchanges of Colombia, Chile and Peru, becomes an attractive strategy for private equity funds.
  • There is an excellent opportunity to obtain local capital resources from institutional investors such as pension funds and insurance companies, which have had an excellent performance in recent years.

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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OPPORTUNITIES FOR CREATION AND MANAGEMENT OF PRIVATE EQUITY FUNDS IN COLOMBIA

  • The International Monetary Fund (IMF) projected that the Colombian economy will grow by 3% in 2018, beating countries such as Argentina (2.5%), Mexico (2.3%), Brazil (1,9%), Venezuela (-6%), and the average for the region (1.9%).
  • Reduction in the unemployment rate. In 2017, the average unemployment rate was 9.1%.
  • The country is also internationally recognized for the protection of investors, ranking 16th in the world and 1st among the countries of Latin America. (Doing Business 2018).
  • Colombia has a growing middle-class population. In 2017, the percentage of the adult population within the financial system reached 80.1%. (Banca de las Oportunidades).
  • The integration of the stock exchanges of Colombia, Chile, Mexico and Peru becomes an excellent exit strategy for private equity funds, with greater diversification alternatives for investors and access to the equities market.

MULTI SECTORAL INVESTMENT OPPORTUNITIES

  • Colombia has a diversified economy with investment possibilities in different sectors such as agro-food, services, industry, mining, commerce and construction, among others.
  • Develop investment projects in small and medium-sized companies in stages of expansion and consolidation in line with the investment strategies of the capital fund management firms.
  • According to the National Association of Financial Institutions (ANIF), the investment potential in these companies is given by the availability of labor and contribution to growth.
  • Capital funds have identified investment opportunities in the sectors of: health, software and IT, hotel and tourism infrastructure, real estate, forestry, agro-industry, energy, road infrastructure and innovation projects, sectors in which capital fund firms they have already invested (Bancoldex).

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

  • According to Colcapital, as of June 2017 there were 103 funds with operations in Colombia, of which 8 fulfilled their life cycle, with a total of 95 funds currently remaining.
  • The committed capital of these funds is a very important financing alternative for Colombian entrepreneurs. Throughout the history of the fund industry in Colombia, USD 9,687.4 million have been invested in 607 assets.
  • Changes in regulation allowed pension management companies to invest in private equity funds. At present, there are 4 pension funds (Protección, Porvenir, Colfondos and Old Mutual) and more than 20 insurance companies with the capacity to invest in private equity funds.

 

Regions

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

Success Stories

  • 12 TREE: The arrival of the German 12Tree Finance fund also stands out in the agribusiness sector. They have a strong rural focus, including forest plantation programs in Puerto Carreño, Vichada, a biomass plant in the Orinoquia region, and cocoa crops in the Middle Magdalena and Urabá regions.
    The German company's operation has created 150 jobs and involved an estimated investment of US $85 million.
    In addition to providing new opportunities for development and social and environmental benefits in the region, other reasons for investing in Colombia are the signing of the peace agreement and the country's potential to be considered, along with Brazil, the "lungs of South America."
  • ACUMEN: Acumen impact fund invests in post-conflict zones.
    The U.S. investment fund specializing in the agribusiness and impact sector invested about US $1.1 million in the company Cacao de Colombia (known for its Cacao Hunters line) in order to establish a second production plant in Popayán, Cauca. Currently the Colombian company has a high export potential for its high-end chocolate to Asian markets. Exports are expected to increase by at least 25% with the start of production at the new plant. It is important to mention that the Colombian company has a high level of commitment and corporate responsibility toward the communities and producers who provide the company with fino de aroma cocoa for its chocolate lines (in Arauca, Nariño, and the Sierra Nevada of Santa Marta).

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:
Juliana Gómez: This email address is being protected from spambots. You need JavaScript enabled to view it.

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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