The private sector lending and investing arm of the World Bank, the International Finance Corporation (IFC), has been financing projects in Colombia at an increasing pace that reveals a lot about Colombia’s business sector.
Information about Colombian firms and transactions in general is scattered around the web. With one search on its very helpful website, by contrast, all IFC projects in Colombia can be listed, each with its own write-up describing the ownership of the Colombian firm and the purpose of the project, among other information. But nowhere on the site has all this information been compiled and analyzed. What does the IFC’s investment teach about firms in Colombia?
The IFC has been investing very actively of late in Colombia, in a number of sectors, not just with the major syndicates and families but also foreign investors, infrastructure, and non-profits. The pace of of investment activity has increased in number of deals and value and is well-diversified. In each of 2003 and 2004, IFC did only one deal in Colombia, and only three in 2005. From 2005 through the end of Q209, IFC has completed 35 deals, including its biggest.
Reportedly, IFC investing positively affects the general conditions of investment activity in Colombia, for example, by setting a standard for minority investors rights. Bogota lawyer Claudia Barrero, of Prieto & Carrizosa, indicated in a recent conversation about private equity investing in Colombia that shareholder agreements protecting financial investors are common and satisfactorily enforceable. To illustrate, she referred to the fact that the IFC invests actively as a passive investor or lender as an example of a very sophisticated institution that is confident enough with its treatment in Colombian firms to keep coming back for more. (Colombia Law & Business Post is on the lookout for an example of an IFC shareholder agreement if anyone can post one.)
Firms that have IFC relationships may therefore be suitable candidates to attract other financial investors. A review of the list of companies and projects IFC has funded indicates a number of circumstances where there are participants alongside the IFC, but the information developed so far is insufficient to indicate whether, foreign minority investors have been attracted to the same firms after the IFC investment.
Colombia Law & Business Post has aggregated and indexed the publicly available, if dispersed, information about IFC-financed firms and projects. The following alphabetically-organized list and information is culled from dozens of separate entries on the IFC website.
Companies Financed By IFC, Ownership, and Project Information
IFC = International Finance Corp. project descriptions posted at IFC website (see Project Search Page)
Company and Ownership Info.
Abocol (Abonos Colombianos)
Abonos Colombianos S.A. (Abocol or the company) main production facilities are concentrated in the industrial area of Mamonal, Cartagena, Colombia. In addition, Abocol has bulk blending plants in two cities in central Colombia – Villavicencio and Espinal.The company also has four subsidiaries, as follows: FLIQ, a liquid and solubles facility in Bogota, Sociedad Portuaria Mamonal S.A. a private port adapted for 8,000 ton vessels in Cartagena, and two products distributors, one in Villavicencio –Fertillanos – and a second one in Costa Rica –Abocol Costa Rica.Abocol operations in Cartagena, which include:- the South Plant which consist of an NPK (Nitrogen-Phosphorus-Potassium) Plant, two ammonium nitrate plants, and a calcium nitrate plant, and- the North Plant which is conformed by two nitric acid plants NAN1 and NAN2, an ammonia plant, and the utilities complex, and- a terminal designed to receive ships up to 8,000 tons of capacity used to received raw materials and dispatch products.Abocol produces fertilizers (NPK, calcium nitrate, straights, blends, and foliars –liquid fertilizers) and industrial products (ammonia, nitric acid, and ammonium nitrate 83%) and commercialize straights fertilizers.
A Loan for carbon credits. The first project involves upgrading the technology of the current NPK plant, through the ODDA process maintaining its production capacity at 300,000 MTY of NPK solid granulated, producing the raw material for the production of 100,000 MTY of solid granulated calcium nitrate as by-product, and replacing 85% of mono ammonium phosphate usage with phosphate rock as raw material.The second project involves:- installing a nitric acid plant, with capacity to produce about 80,000 MTY,- installing an ammonium nitrate solution plant with capacity to produce about 82,000 MTY, and- building a calcium nitrate plant, with capacity to produce about 100,000 MTY of calcium nitrate solid granulated and 25.000 MTY of calcium nitrate liquid 100% concentration by 2009.
Avianca is wholly owned by Synergy Aerospace Inc., through its Colombian subsidiaries, Synergy Ocean Air Colombia S.A. (94.95% ownership) and Synergy Ocean Air Colombia 2 S.A. (5.03% ownership).Synergy Aerospace Inc. is owned by Synergy Aerospace Corp. which is owned by the Synergy Group (Synergy). Synergy is incorporated in Panama and is part of a major Latin American conglomerate (with operations in Brazil, Colombia, Ecuador, the United States and Peru) that was founded in 1982. The group is active in the following sectors: power generation, aerospace, shipyard, oil and gas (provision of services and production) and telecom. The consolidated revenue of the group in 2007 is estimated to exceed $2.4 billion. In addition to Avianca, Synergy owns the following airlines: Ocean Air in Brazil and VIP in Ecuador.
Corporate loan to finance aircraft acquisitionAerovias del Continente Americano S.A. (Avianca or the company) is planning to renew its fleet over the period 2008-2012 to reduce costs, improve efficiency and safety as well as provide better passenger service (the “Upgrade Program”). The company has negotiated the purchase of 42 aircraft over the next 5 years (including at least 12 Boeing-787s and a number of Airbus-319/320s) to replace its MD-83 and Boeing-757/767 aircraft. The proposed project is to provide financing of up to $50 million to Avianca and its subsidiaries to help finance the implementation of the company’s fleet renewal program.
Banco Davivienda S.A.
Banco Davivienda S.A. (Davivienda or the bank) is a longstanding IFC client and the fourth largest financial institution in Colombia, with approximately $3 billion of assets and $390 million of equity as of August 2005. Originally specialized in mortgage lending, Davivienda has since diversified its product offering to become a full service commercial bank in Colombia. Having consistently delivered strong financial results, Davivienda has currently a local long-term credit rating of “AAA” by Fitch Ratings.The project sponsor is Davivienda, which is majority owned (66.25%) by Grupo Bolivar. Founded in 1938, Grupo Bolívar is the fifth largest economic conglomerate in Colombia and focuses on the financial sector. The Group is a strong player in the insurance industry, with the second largest insurance company in Colombia, including life and general insurance. Grupo Bolívar’s companies include strong players such as Davivienda itself, Seguros Bolívar, Leasing Bolívar, Constructora Bolívar and a host of smaller entities such as a mutual fund, trust company, stock broker and beach resort. Furthermore, Davivienda recently acquired a controlling stake in Banco Superior (“Bansuperior”), a successful commercial bank in Colombia with a strong position on retail banking, especially on the credit card business.
The Bank is seeking to raise subordinated and medium-term senior debt to strengthen its balance sheet, diversify funding sources, maintain its strong liquidity position and improve the Bank’s capitalization levels. The project consists of a financing package of up to $120 million to support the expansion and consolidation of the Bank’s operations in Colombia. The project will help Davivienda continue to expand its retail business while maintaining a strong presence in the mortgage industry. The project consists of a financing package of up to $120 million equivalent to Davivienda. The Facility will comprise of:- a Colombian peso subordinated loan of up to $60 million equivalent with a final maturity of up to ten years and a conversion option to be negotiated, and- a senior loan comprised of an IFC A loan of up to $20 million and a parallel loan of up to $40 million for the account of participant banks, both with a final maturity of up to five years.
Banco Davivienda S.A.
Financing for acquisition of Granbanco SA. $75 million of direct equity investment into Davivienda and $125 million ($65 million expected for IFC’s own account) of subordinated debt.
Bogota Distrito Capital – Bogota Street Rehab-ilitation
Bogota, the capital and main economic center of Colombia, has a population of 7.3 million and contributes about a quarter of the country’s GDP. GDP per capita, estimated at $4,300 in 2006, is well above the country’s average of $3,255. The economy is diversified and no single sector is dominant.Bogota is divided into 20 local wards, which focus on neighborhood-level infrastructure and community consultation. City-wide services, including the core street network, are administered by Bogota Distrito Capital, which also collects local taxes. BDC is governed by a legislative District Council, with an elected Mayor leading the executive branch.BDC has steadily improved its performance since it emerged from a financial and service delivery crisis in the early 90s. The local issuer rating assigned by Duff and Phelps de Colombia is AAA, while the international foreign currency issuer ratings assigned by Fitch, S&P and Moody’s are the same as Colombia’s sovereign (BB+ / BB+ / Ba1, respectively).
Senior Loan million senior loan to the metropolitan municipality of Bogota Distrito Capital, to finance part of its 2007-2008 capital expenditures program for and rehabilitation of the City’s urban streets network as well as incremental construction of sidewalks and walking/bike paths.
Cartagena Port Terminal de Contenedores Cartagena SA (Contecar)
Contecar, a 22 hectare private port facility is located near to the harbor entrance and industrial area of Cartagena. In February of 2005, with the vision of becoming the leading port in the Caribbean basin and looking for a way of addressing the expected capacity constraints at Sociedad Portuaria Regional de Cartagena (SPRC), the shareholders of SPRC acquired Contecar with the idea of developing the new port and integrating both companies’ operations.SPRC is a privately owned company constituted under Colombian law on June 25, 1993. In December 1993, the Government of Colombia awarded SPRC with the concession to develop and operate a container and multipurpose terminal at the Port of Manga in Cartagena, Colombia. The 20-year concession, originally awarded in 1993, was extended in 1998 and is scheduled to expire in 2033. Under SPRC’s management, the Port of Manga has become Colombia’s largest and most important container port terminal. The project sponsors are SPRC and Cartagena II, sister companies with common shareholders. Cartagena II currently owns 85% of Contecar, with the remaining 15% owned by SPRC. Cartagena II, constituted in 2006, is the result of the spin off of SPRC assets (primarily investments in assets and in ancillary businesses) that do not have to revert back to the government at the end of the SPRC concession term.SPRC’s and Cartagena II major shareholders are:- Dimarco Enterprises Ltd. (16.69%)- Inversiones Salas Araujo & Cia S en C. (10.81%)- Rosales S.A. (9.67%)- Compañía Transportadora S.A (8.74%)No other shareholder holds more than a 9% ownership stake. The Municipality of Cartagena and the Government of Colombia holds 2.11% and 1.82% respectively.
A Loan for IFC’s own account in $210M four year capital expansion program to develop Contecar into a world class container port terminal. The capital expenditure program is expected to increase Contecar’s annual capacity from 144 thousand TEUs to 850 thousand
Cartones America S.A. is a leading privately-owned, Andean Region manufacturer of containerboard, corrugated boxes, clay-coated paperboard, spiral tube board and specialty board packaging products. The Group traces its roots back to the 1950s in Cali, Colombia. In recent years, the Company has grown steadily, investing in operations in Venezuela, Ecuador, Peru and Chile. CAME is in an important phase of its development and the project is aimed at helping CAME consolidate recent investments and realize the synergies to be achieved in its operations across the Andean Region.Cartones América S.A. (incorporated in Cali, Colombia) is the holding company of the Group and holds directly or indirectly 100% of the operating subsidiaries in Peru, Venezuela and Ecuador and 60% of its subsidiary in Chile.It is majority owned by the Pacini family (the sponsor) and CAOBA Capital.
Cartones America is planning to reduce their use of energy at their plant in Cali, Colombia. The energy efficiency improvement project planned by Cartones consist several sub-projects which will help it to reduce its energy consumption and thus reduce the operating cost for energy by almost 17% annually. This project is an overall energy systems improvement which will consist of improving the electrical system, such as lowering the voltage setting on the transformers, improving the transmission efficiency of motor by using poly V-belts instead of ordinary V-belts, increase the efficiency of the electric motor by replacing large standard efficiency motors with high efficiency motors and also down-sizing motors so that they operate at optimal loading, the plant will also install variable speed drives on some application so that the supplied power to the machines matches the demand and also improve its lighting and refrigeration systems. On the thermal side the plant will be improving the efficiency of its boilers by installing automatic air-fuel regulators, improving its insulation on its steam pipes, valves and flanges and most importantly it will be improving the steam/ condensate management system at its Paper machine 3 so that its specific steam consumption will be reduced. Together, these “Cleaner Production” investment for energy efficiency qualify for funding via IFC’s Board approved Cleaner Production Lending Pilot, a $20 million Facility via which IFC can provide Cleaner Production sub-loans to its existing portfolio clients.The estimated total project cost is $755,814 and the proposed IFC investment is an A Loan (Cleaner Production Loan) of $756,000 equivalent for IFC’s account. This investment in Cartones America will be a sub-loan for the above mentioned dedicated lending facility established as part of IFC’s Cleaner Production Lending Pilot initiative.The Cleaner Production Investment will be implemented at Cartones America’s Cali plant, which is located about 190 miles South-West of Bogota.
Cartones America SA Cartones II
Up to $5M in equity and total $20M investment to acquire facilities in Chile, upgrade Colombian facilitiesCartones America’s (CAME, the Group, or the Company) 2006-2008 investment program and includes:- acquisition of a 60% stake in Chilempack, (Chile);- upgrade and expansion of CAME’s manufacturing facilities in Colombia, Venezuela, Ecuador, Chile and Peru; and- refinancing existing short-term debt.Earlier project approved: 20721 (2003)
Carvajal S.A. is 64.2% owned by members of the Carvajal family of Colombia, and 35.8% by the Fundacion Carvajal and the Fundación Hernando Carvajal B, foundations set up by the Carvajal family in 1961 to do philanthropic / charitable work in Cali, Colombia. Carvajal Internacional S.A. is wholly owned by the Carvajal family.
The company’s expansion, rationalization and modernization plans in the 2003-2007 period, to help its Project Core Businesses to grow (organically and through acquisitions), to become leaders in their sectors, and to achieve international competitiveness. In particular, the project includes the following components:- Paper Manufacturing/Conversion:Modernizing and rationalizing its existing plants;- School/Office Supplies:Modernizing its facility in Brazil, and expanding its operations, mainly in Mexico and Brazil;- Yellow Pages:Rationalizing and growing its operations in Brazil;- Book and Text Book Publishing/Editing:Growing its operations in Mexico and Spain; and- Plastic Packaging:Modernizing its Colombian facilities, and expanding its operations there and in Mexico.
In addition, the project will also contemplate environmental and social and health and safety improvements at some of the company’s facilities in and outside Colombia.
The cost for ERP implementation is estimated at $78 million. The proposed IFC investment is a $50 million A loan for IFC’s own account.
Century Energy Corp.
Century Energy Corporation (Century), a Panamanian company wholly owned by the Helm Group. The Helm Group is a foreign-owned Colombian conglomerate, operating in a range of businesses with most of its companies located in Colombia but also with presence in other Latin American countries and the U.S.
$13M A loan, $2.5M C loan, for IFC account, in $43.7M project for development, construction and operation of two small run-of-river hydropower plants in the Guadalupe river basin, 95 kilometers (km) north of the city of Medellin, in the Antioquia Department in western Colombia. Arms-length, fixed price engineering, procurement and construction (EPC) and operation and maintenance (O&M) agreements with HMV Ingenieros.
Century Energy Corp. (Century Hydros)
Development, construction and operation of two small run-of-river hydropower plants in the Guadalupe river basin, 95 kilometers (km) north of the city of Medellin, in the Antioquia Department in western Colombia. The two plants, Caruquia S.A. (9.5MW) and Guanaquitas S.A. (9.8MW) are expected to begin commercial operations in late 2009 and early 2010, respectively.The project companies will enter into arms-length, fixed price engineering, procurement and construction (EPC) and operation and maintenance (O&M) agreements with HMV Ingenieros which is also wholly owned by the Helm Group. HMV Ingenieros is one of the largest engineering consulting firms and the leading consultant for the power sector in Colombia.Total project cost is estimated at $43.7 million ($21.5 million for Caruquia and $22.2 million for Guanaquitas). The project will be financed with $31.0 million of debt and $12.7 million of equity contribution from Century. The proposed IFC investment includes a $13.0 million A loan and a $2.5 million C loan, for IFC’s account.
Compania de Gerenciamiento de Activos Ltda.(CISA) NPLs
CISA is a ‘Consortium’ including affiliates of the Capital Recovery Group of AIG Global Investment Corp., Covinoc S.A. and CarVal Investors, LLC to finance the purchase of a portfolio of Non-Performing Loans (NPLs) and other Non-Performing Assets (NPAs) a majority of which were accumulated by the government of Colombia post the financial crisis of 1999.AIG Capital Recovery Group is a division of AIG Global Investment Group (AIGGIG), which is headquartered in New York. To date the AIG Capital Recovery Group, on behalf of various American International Group, Inc. subsidiaries, has invested over $1.296m in non-performing loans, through structures similar to that being proposed in Colombia. The team’s impressive track record on closed transactions is collectively more than $732m or almost 56% of invested capital.AIG Global Investment Group is a worldwide leader in asset management, with extensive capabilities in equity, fixed income, multi-manager hedge funds, private equity, and real estate. AIGGIG manages more than $687 billion in assets, and employs over 2,000 professionals in 44 offices around the world as of March 31, 2007. AIGGIG comprises a group of international companies which provide investment advice and market asset management products and services to clients around the world. The member companies of AIGGIG are subsidiaries of American International Group, Inc. (NYSE:AIG).CarVal Investors was founded in 1987 by Cargill and has acquired over $19 billion in assets in 2,900 transactions in 35 countries. Today, CarVal Investors has over $12 billion in assets under management. CarVal Investors has an experienced team of 299 employees in 15 offices and a global platform focused on investing in management- and credit-intensive assets and market inefficiencies.Covinoc S.A. is a local servicer specialized in management of distressed assets across different sectors. Covinoc has national penetration through 12 branches across the main cities in Colombia. In December of 2006 the company began operations in Guatemala.
A1 and A2 loans and equity of up to 15% at SPV level, and syndication of B1 and B2 loans as part of $306M project to finance the purchase of a portfolio of Non-Performing Loans (NPLs) and other Non-Performing Assets (NPAs) a majority of which were accumulated by the government of Colombia post the financial crisis of 1999. IFC would provide both debt and equity financing to a local Colombian SRL established by the Consortium.The proposed project presents IFC a unique opportunity to participate in the first NPA deal of this scale being placed to international bidders in Colombia. It also marks a turning point for the authorities as after this sale the government would have no further obligations pertaining to its intervention post financial crisis.
Covinoc has, for more than 50 years, provided recovery and portfolio management services to financial intermediaries in Colombia. Covinoc is headquartered in Bogota, Colombia. The company has offices in 14 cities of the country, allowing it to have a national operational coverage.Shareholder Composition:Inversiones La Costa: 21.78%Delta Asociates J.C.: 11.60%Lantro S.A.: 22.31%Ircanda S.A.: 22.31%ARIGU y Cia. C.S.A.: 20.00%Nicolas Gomez y Compañia: 1.00
The proposed investment consists of an equity investment in common shares for up to US$5 million earmarked at strengthening Covinoc’s ability to administer pools of non-performing assets. This investment is expected to assist the Company in the implementation of the growth plan put forth by its management and shareholders.
Crediservicios was established in 2003 and has since then experienced healthy growth rates. As of December 2007, the company had over $65 million equivalent in assets and an equity base of approximately $2 million equivalent.Shareholders:Desarrollos Industriales del Cauca S.A. 42.00%Crediholding S.A. 27.95%Hector Aguiar 15.00%Labor Financiera S.A. 15.00%Agropecuaria la Esmeralda Ltda. 0.025%Agrocorcega S.A. 0.025%
Coinvestment with Crediservicios in a Fondo de Capital Privado [Private equity Fund] for payroll deductible loans to low and middle income employees.The project involves supporting Crediservicios (Crediservicios or the company), a locally established, mid-sized company, in offering pay-roll deductible loans to clients spread across Colombia. The company’s core clientele are low to middle income employees who traditionally do not have access to the banking system.According to a survey conducted by USAID on September 2007, only 26.1% of the low-income households in Colombia (socio-economic groups 1, 2 and 3) have access to credit with banks, cooperatives or NGOs, while 35% obtain short-term resources from friends or informal lenders at interest rates as high as 280% per annum. Crediservicios plays an important role in reducing this gap as it actively provides financing solutions for this underserved segment.
Finandina (Financiera Andina S.A.)
Finandina is a finance institution established in 1977. The company maintains strong ties to vehicle dealerships and others within the transport sector. Finandina has over $314 million equivalent in assets, $174 millions equivalent in deposits and an equity base of $35 million equivalent as of January 31, 2008. Currently Finandina has a long-term credit rating of AA+ (national scale) by BRC Investor Services (Moodys). Comerciales Intergrados Sociedad Anonima – Cintesa: 75.820 %Finanzauto Factoring S.A.: 7.620 %Comercial Automotriz de los Andes Ltda. Comandes Ctda: 6.085 %Comercial Automotora S.A. Comauto S.A.: 4.498 %Motores y Maquinas S.A. Motorysa: 3.068 %Casa Toro S.A.: 2.909 %
The company’s core clientele are consumers, micro entrepreneurs and transport vehicle owners who use the credit offered by Finandina to undertake investment projects needed to improve the freight distribution capacity within Colombia.
Colombia’s banking penetration of 23% as of December 2006 is still low in relation to international standards and accordingly there is an unmet demand for credit from local SMEs active in the transport arena. Finandina plays an important role in reducing this gap as its financing solutions are tailored to suit the needs of this underserved segment. 10% equity stake to help provide car and vehicle financing to consumers, micro enterprises and transport owners
Founded in 1911, by Father Jose María Campoamor, a Spanish Jesuit priest, Fundación Social is legally established as a not for profit entity. The mission of the Fundación is “to work to better the livelihood of low income households by making investments aimed at removing the structural causes of poverty in Colombia”. As such, the Fundacion has promoted itself as an organization catering to the needs of the middle and lower income segment of Colombian society and operates in all 6 geographical regions of Colombia. Managed as a private sector entity, over the last 85 years the Fundacion has invested in a number of ventures ranging from insurance, leasing, construction companies, television stations, savings institutions and banks. All companies within the group operate under the guidelines given by the Fundación which contributes to the coordination of their business activities. In order to maximize their potential.
IFC is considering providing Fundación Social (the “Fundacion”) a long term loan of up to $50 million part of which may be exchanged into equity in any of the Fundacion’s investee companies. Following the appraisal the management team at Fundacion and IFC will jointly agree on the specific terms for this investment. This investment will allow IFC to support the activities of an entity which has an impressive track record of investing in socially responsible projects and targeting lower income households as its core clientele.
Giros y Finanzas Compania de Financiamiento Comercial SA
Giros y Finanzas (GyF or the company) is a Colombian financial institution based in Cali, Colombia. The company offers financial services under five business lines:- distribution of remittances as agents of Western Union (with an 13% market share in Colombia);- foreign exchange operations;- deposits;- maintaining a trading desk (investing excess cash to give liquidity to the institution); and- lending.In the latter, the company grants car loans, leasing, factoring, and other type of consumer loans to money remittance beneficiaries. The majority of this lending is directed to its own clientele, taking advantage of cross-selling opportunities.GyF’s shareholding structure is as follows: Banvivienda S.A. (Grupo Mundial) 51.00%Lome S.A. 15.31%
Quinque S.A 14.04%
Procoa Ltda. 10.00%
Rodrigo Otoya Domínguez 4.31%
Diana Casasfranco de Otoya 4.31%
Carlos Eduardo Lora Rengifo 1.03%
Grupo Mundial is an emerging financial conglomerate with insurance and banking operations throughout Central America and Colombia. The Group’s main subsidiaries are Aseguradora Mundial S.A., which is Grupo Mundial’s main asset and core entity and Banco Panameño de la Vivienda S.A.
The rest of the shareholding structure is formed by local Colombian companies and individuals related to the Otoya and Lora families. They are entrepreneurs focused on projects in gasoline service stations, agribusiness, construction, real state and cattle among other private investments. Before Grupo Mundial’s acquisition they were GyF’s major shareholders.
microfinance and lending to low income households in ColombiaThe purpose of the proposed IFC investment is to support and expand GyF’s lending program focused on microfinance and lending to low income households in Colombia.The proposed project involves a $6,000,000 loan (or equivalent peso-linked loan).
Greystar Resources is a junior mining company listed on the TSX and AIM exchanges, and it has a market capitalization of approximately C$121 million. The company’s principal office is in Vancouver, Canada with its operational office in Bucaramanga, Colombia.The company’s ownership includes both institutional and individual investors. The company’s largest shareholders are currentlyJP Morgan Asset Management UK Limited (13.1%) and Mr. George Milton (12.9%).Greystar Resources Ltd. (“the Company” or “Greystar”) is a TSX and AIM listed junior mining company that owns 100% of the Angostura gold and silver exploration project (the Project”) near Bucaramanga, in the Santander region of Colombia. Greystar has acquired concessions covering approximately 30,000 hectares over a 15-year timeline and during this time has spent approximately C$95 million in exploration and concession acquisition/maintenance costs.As of December, 2008, the company had completed an intensive drilling program yielding a resource estimate of 11.6 million ounces of measured and indicated gold in 330.9 million tonnes of material grading 1.09 grams gold per tonne and 3.47 million ounces of inferred gold in 90.8 million tonnes grading 1.11 grams gold per tonne, making it one of the world’s largest undeveloped gold resources.The company is now commencing with a bankable feasibility study (“BFS”), environmental and social impact assessment (“ESIA”), and other associated work, with the goal of developing the mine in late 2009/early 2010.
The total project cost of the exploration and pre-mine development phase of the project is estimated at C$131 million, and the company is seeking to raise up to US$20 million from IFC. It is proposed that IFC will initially contribute approximately C$12.04 million in equity with a right to invest approximately up to an additional C$12.19 million on the exercise of warrants to be issued as part of the equity subscription (these estimated proceeds are based on current exchange rates). IFC’s investment would be used to fund completion of the BFS, ESIA, and other needed ground works to prepare for the project development stage. For the period from 2001 to the present, the company raised C$122 million in equity financing, including the exercise of warrants related to the financings.The Angostura project is located 55 km by road from Bucaramanga, the capital of the Santander Region. The deposit elevation ranges from 2,600 to 3,400 meters above sea level. The project is in a traditional mining area; it enjoys access to the existing power grid, water and materials, and a skilled local work force. There are three villages which are located within 15 km of the project site.Development Impact: Colombia has substantial mineral resources, but the country still suffers from country risk perceptions among many potential foreign investors. A successful project of this size would likely spur significant additional global mining interest in Colombia, particularly valuable at a time when Colombia has demonstrated considerable progress in addressing security issues and political risk and is well positioned for continued economic success.IFC has identified Colombia as a primary target for mining investment because of the potential for substantial development impact from the mining sector. This would be IFC’s first mining investment in Colombia.A mine development of the expected size could have substantial impact on the local communities, not only through direct employment and services, but also from government royalties and taxes that flow back directly to local municipalities. It is estimated that 97% of the royalties will flow back directly to the region, with 87% of total royalties flowing to the municipality level. The Government of Colombia and oil and gas companies have been working with IFC on a pilot municipal level royalty management and capacity building program in the petroleum sector. The Government of Colombia, the Ministry of Mines, and mining associations have expressed interest in expanding this program to the mining sector. The two municipalities where the project is located could be part of any second pilot program, further ensuring greater development benefits to the local communities.
Grupo Bolivar is the third largest local financial conglomerate in Colombia. The Group is a strong player in the insurance industry, with second largest market share through the Insurance Companies, and in the banking industry, with the third largest bank in Colombia, Banco Davivienda.Grupo Bolivar’s companies include strong players such as Davivienda, the Insurance Companies, Constructora Bolivar and a host of smaller entities including a mutual fund, a trust company, a stock broker and a beach resort.
Equity shares for recapitalization to separate cross-holdings of insurance companies Sociedades Bolivar S.A., Compañía de Seguros Bolivar S.A., Seguros Comerciales Bolivar S.A. and Capitalizadora Bolivar S.A., which hold a number of the Group’s operating companies.
Equity investment in common shares for up to $75 million to recapitalize the Insurance Companies and restore its solvency margins to levels before elimination of non-insurance related investments). Grupo Bolivar is the third largest local financial conglomerate in Colombia. The Group is a strong player in the insurance industry, with second largest market share through the Insurance Companies, and in the banking industry, with the third largest bank in Colombia, Banco Davivienda.
Interbolsa S.A. (Interbolsa or the company) is the largest securities broker in Colombia, with approximately $396 million of assets and $58 million of equity as of December 2005.Incorporated in 1990 Interbolsa is the first independent brokerage company in Colombia with a leading expertise in proprietary trading and government debt market making. Interbolsa is listed in the Colombian stock exchange under Interbolsa, “AIC” and currently has an estimated 800 shareholders. The company has recently expanded its operations into asset management through an equity participation in Fondo NaciónOriginally dedicated to securities trading in Medellín, Interbolsa is currently the second largest proprietary trader in the Colombian market and has slowly diversified into asset management, retail brokerage and investment banking. Having consistently delivered strong financial results, Interbolsa has currently a local long-term credit rating of AA with a positive outlook by Bankwatch Ratings Colombia, “BRC”.Interbolsa is owned (62%) by major shareholders including the Jaramillo, Maldonado and Ortiz families through indirect participations through holding companies.
The project consists of a “PCG” for up to $30 million equivalent to Interbolsa. The facility will comprise of:- a PCG in local currency for up to $30 million with a final maturity of up to six years and- a warrants of up to $10 million to be negotiated.Interbolsa is seeking to issue the first local currency medium term bond by a securities broker in the Colombian market to strengthen its liquidity, diversify funding sources, and reduce market risk. The project consists of a partial credit guarantee, “PCG” of up to $30 million that would enhance the rating of the bond up to two notches from local rating agencies. The project will also help Interbolsa continue to strengthen it liquidity and strengthen its proprietary trading business as well as consolidate retail brokerage activities in Colombia.
Kappa Resources Colombia SA
Kappa Energy Holdings (BVI) Limitied (Kappa), a holding company registered in the British Virgin Islands, holds oil and gas exploration companies, one of which is Kappa Energy Colombia Limited S.A. This company has been operating in Colombia since 1997 and holds exploration and production licenses. Its main production assets are the Abanico oil field in the Upper Magdalena Valley and the Cerrito gas field in the Catatumbo Basin near the city of Cucuta.
$30M of $90M project Kappa Energy Limited SA, Kappa has requested the IFC to provide a corporate revolving credit facility and the IFC is also considering an equity investment, oil and gas exploration in the Magdalena Valley and the Cerrito gas field in the Catatumbo Basin near the city of Cucuta.
MEB Port (Terminal Maritimo Muelles El Bosque)
In 1992 Terminal Maritimo Muelles el Bosque S.A. (MEB) began executing a 20-year concession (extended in 2005 for another 20 years until 2032) to develop and manage a new multipurpose port in the Bay of Cartagena, on Colombia’s Atlantic coast. Muelles el Bosque Operadores Portuarios S.A. (MBO and together with MEB the company), a sister company to MEB, is the operator of the port facility. The port occupies and area of 13 hectares and is the second largest in the city of Cartagena and the fifth largest in Colombia.MEB and MBO are controlled by entities owned by the Echavarria Obregon Family. This is a well respected economic group in Colombia that holds an important stake (amongst other investments) in Grupo Corona, the leading producer of construction materials, home improvements products, ceramic tiles and sanitary ware in Colombia. The Echavarria Obregon Family controls 72.65% of MEB and MBO.Other large shareholders of the company are:Ership International S.A. (9.50% shareholder), a Spanish company which is wholly-owned by the Alvarogonzalez family and operates in the field of transport, warehousing, and handling of solid bulk commodities; andInversiones Valores y Logistica. (7.01% shareholder) a company owned by Bancolombia, the largest financial institution in Colombia.The remaining shareholders are individuals who own less than 3.5% of the company.
A loan for capital expansion program of $27.1M In 1992 Terminal Maritimo Muelles el Bosque S.A. (MEB) began executing a 20-year concession (extended in 2005 for another 20 years until 2032) to develop and manage a new multipurpose port in the Bay of Cartagena, on Colombia’s Atlantic coast. Muelles el Bosque Operadores Portuarios S.A. (MBO and together with MEB the company), a sister company to MEB, is the operator of the port facility. The port occupies and area of 13 hectares and is the second largest in the city of Cartagena and the fifth largest in Colombia. In 2006 it received 438 ships and handled 46,278 containers, 253,179 tons of general cargo, 412,714 tons of grains and 52,760 tons of coke (fuel).The proposed project includes:- the extension of the south container terminal berth by 180 meters;- the expansion of the container yard by 3.2 hectares and the paving of the existing container yard;- the acquisition of an additional mobile crane and other container yard equipment;- the extension of the north berth by 50 meters;- the building of two additional warehouses/silos;- purchase of land to increase container storage space; and- the upgrade of the port’s IT systems.
Org. Terpel SA
Organizacion Terpel S.A. (Terpel or the company) is the leading fuel distribution company in Colombia, with sales of $2 billion in 2006. In 2005, the company began an international expansion in Latin America through the acquisition of 65 service stations in Ecuador and a wholesale and retail fuel distributor in Panama acquired in early 2007. Promigas S.A., Terpel’s largest shareholder holding 34% of its shares, is a private gas transmission company headquartered in Barranquilla and controlled by Ashmore Energy International (US). Promigas has interests in gas transmission, gas distribution, fuels and lubricants and the telecommunications sector. Promigas has been an IFC client since 1976.Promigas, GNC (G.N.C de Colombia S.A.) and Terpel group are finalizing a strategic reorganization that integrates fuel and natural gas retail business. As a result, Promigas will be gaining control of Terpel by increasing its participation in the company to 54%.Terpel’s second largest shareholder (11%), Corporacion Financiera Colombiana – Corficolombiana, was established in 1959 as the first Development Finance Corporation, servicing the central region of Colombia. Today, Corficolombiana is a private company which offers three specialized services: Credit, Investments and Financial Intermediation. Corficolombiana S.A. belongs to Grupo Aval, one of the four most important economic organizations in Colombia.
$60M A loan and $40M B loan to fuel distribution company for capital expansion and recapitalization project cost of $2880M
Petrotesting Colombia SA
Petrotesting Holding Limited is a holding company registered in the British Virgin Islands (“BVI”). Petrotesting Holding is comprised of five companies: Petrotesting Colombia S.A. (oil and gas exploration and production company), Colregistros Ltda. (oil services company), Sumprocol Ltda. (distribution company, predominantly of lubricants), Petrotesting Drilling S.A. (oil and gas drilling services company) and Petrofood Services Ltda (food supply company for petroleum industry workers). Collectively these companies are known as the Petrotesting Group. Additionally, there is Petrotesting Carbon Ltda (coal mining company), which is not held by Petrotesting Holding Limited, but part of the Petrotesting Group. The dominant company is Petrotesting Colombia S.A (“PTC”), founded September 2, 1985, which is where IFC resources will be focused.PTC is a local Colombian company which defines it business niche as small and medium fields. Since inception PTC has grown into a highly regarded company with 14 E&P assets spread throughout Colombia’s main hydrocarbon basins.
Oil and gas exploration, distribution services, equity and debt investment for $85M to strengthen financial position project over two years adoption of best practice corporate systems (such as those related to governance, environmental, social, community programs and accounting)
Procafecol (Promotora de Café de Colombia)
Procafecol (Procafecol or the company) is a coffee retailer with a total of 58 coffee shops (cafés): 46 in Colombia, 10 in the U.S., and 2 in Spain. The company operates under the “Juan Valdez” brand and sells primarily fresh-brewed coffees, beverages and coffee beans through its company operated cafés (about 85% of revenues), and coffee beans through third party retailers (supermarket chains in Colombia, the U.S., Mexico and Canada) and institutional clients.The company intends to position itself as the leading coffee retailer in Colombia and plans to continue expansion of its retail operations primarily in Colombia and South America.Procafecol was founded in 2002 by Fedecafe, the National Federation of Coffee Growers of Colombia (Fedecafe, the sponsor). Fedecafe is a private not for profit organization established to support the development of Colombia’s coffee sector.Fedecafe owns about 83 % of the company with individual coffee growers accounting for the rest.
$20M in equity for expansion of 150 Juan Valdez coffee shops in Colombia and select international markets
Promigas was established in 1976 to construct a gas pipeline to link natural gas fields on Colombia’s Atlantic coast to distribution networks in the cities of Barranquilla and Cartagena. Promigas is currently Colombia’s largest private gas transmission and distribution company, accounting for approximately 51% of the total gas transported in the country. The company transports and operates gas pipelines of more than 2,286 kilometers with a transport capacity of 480 MMPCD. Promigas also operates 1,000 kilometers of gas pipelines owned by third parties. Through its pipelines, the company distributes gas to more than 1.3 million end users (approximately 7 million people) in 174 towns. Promigas also has an extensive portfolio of natural gas transmission and distribution companies, together with fuel and lubricant distribution and telecommunication interests.Promigas’ major shareholders include:Prisma Energy (42.9%)Grupo Amalfi (15.9%)Corporacion Financiera del Valle (14%)Corporación Financiera Colombiana (10.3%)Fondo de Pensiones Obligatorias Proteccion (5.4%)Inversiones Harivalle (5%).
Promigas has requested IFC to consider providing a corporate loan facility that would support a number of initiatives for the 2005-2007 period. These include potential investments in additional gas transmission and distribution assets in Colombia as well as the acquisition of new assets throughout South America. The proposed IFC facility would support a number of initiatives currently pursued by Promigas during 2005-2007, including potential investments in additional gas transmission and distribution assets in Colombia as well as the acquisition of new assets throughout South America. The total investment program is estimated at a maximum of $319.0 million if all projects are carried out concurrently. The proposed IFC investment in discussion with Promigas, comprised of an A and B Loan, would fund part of this program.
Riopaila Castilla S.A. is the largest sugar company in Colombia comprising ~20% of the country’s total production. The company has two production plants with total sugarcane crushing production capacity of 4.2 million mt/year and more than 1,327 of its full time employees and 5200 sub contracted staff.
Riopaila Castilla is implementing a cost reduction and technological improvement program from 2008–2012 while diversifying its agribusiness activities. Specifically, Riopaila Castilla’s Investment Program entails:adding co-generation capacity with the objective of selling excess energy to the national grid;replacing and modernizing equipment and machinery across production units; andrestructuring short- and medium-term debt that is maturing in 2008–2010.With this Investment Program, Riopaila Castilla expects to:- further integrate the sugar-cane value chain;- improve efficiencies and cut costs by reducing the consumption of steam and energy per ton of cane milled;- carry out needed maintenance investments and equipment upgrades to firm up its competitive position in Colombia; and- strengthen its balance sheet by extending maturity of short- and medium-term debt.
Sodimac is the result of a 51:49 joint venture amongst Grupo Corona (Corona), the leading building materials and ceramics conglomerate in Colombia, and S.A.C.I. Falabella (Falabella), the second largest retail chain in Latin America (and the largest in Chile). Sodimac is headquartered in Bogotá, Colombia and operates 10 stores in five cities (Bogota, Cali, Medellin, Barranquilla and Pereira).Major Shareholders are Corona and Falabella.Corona is a blue chip, Colombian corporate with over 125 years of operations in Colombia. Its core activity is the production and distribution of construction materials and home-improvement products. The group exports its building material products to more than 25 countries with Colombia and the United States being its main markets.Falabella is one of Chile’s largest companies and the largest department store retailer in Latin America with over 50 stores.
Home Improvement retailer recapitalizationThe specific locations of the new stores have not been determined yet. However, the Company’s store expansion will be focused in the main cities in Colombia where the company is already located and might also include some other smaller city in the country.
Tecnoquimicas S.A. (Tecnoquimicas or the company), with its subsidiaries and affiliates, is a local pharmaceutical manufacturer in Colombia. The company and its subsidiaries are involved in the production and distribution of generic pharmaceutical drugs, baby care products, personal care products and animal/veterinary health products. While the company sells majority of its products in Colombia, it also has exports to Ecuador and other countries in Latin America.This company is owned by several companies, in which members of the Barberi family hold shares. Mr. Francisco José Barberi Ospina and Mr. Juan Manuel Barberi Ospina, who will act as sponsors for this project, lead the management team of the company. Tecnoquimicas started operations in 1934, and is based in Cali, Colombia.
$25M equity and up to $20M standby loan for $100M capital project for 8 existing chemical facilities mostly around Cali
The project sponsor is Energy International (“EI” or the “Company”), a company specialized in the power sector in Latin America. EI was created in 1998 as a sales division selling power modules, but also focusing on operations, maintenance, engineering and construction of thermal plants. EI has a fleet of power modules and turbines of nearly 300 MW. EI’s business units include: leasing of power modules and turbines, sale of turn-key medium speed engines, provision of EPC and O&M services, and investments in power projects in the LAC region. EI owns beneficially 100% of the shares of Termo Rubiales.
The total project cost is estimated at about $68.5 million. The proposed IFC investment is a $16.5 million loan. The project is located in the Llanos Basin, 465 km from Bogotá in the Meta Department.Development Impact: IFC is investing in Termo Rubiales to support the development of Meta Petroleum, a promising player of the oil industry in Colombia that has embarked in an ambitious plan to increase the production of the Rubiales field. The investment in Termo Rubiales would be directly supportive of Government policies to increase local production and private investment in the oil sector.
The company is indirectly owned by Companía Colombiana de Inversiones S.A. (“CCI” or the “Sponsor”), a diversified privately owned Colombian company duly incorporated under the Colombian Law. CCI is a Colombian holding company with focus on energy and portfolio investments that is traded in the Colombian Stock Exchange, with a market Cap of approximately $750 million. As of June 2008, CCI’s total assets totaled $1.5 billion and net income was approximately $8.3 million.Colinversiones is mainly owned byGrupo Argos 28%pension funds 24%Suramericana 5%
The total project cost is estimated at about $278.2 million. The proposed IFC investment is a $65 million A Loan for IFC’s own account and $92.5 million B loan from participants. The project is located in Barranquilla, Colombia, 948 kilometers north of Bogotá and 2 kilometers west of the Magdalena river.The project consists of the construction of a 169 MW gas-fired combined cycle unit by Termoflores S.A. E.S.P. (“Termoflores” or “the Company”), a generation company whose operations are located in Barranquilla, Colombia. Currently, Termoflores has three natural gas-fired units in operation, (the Flores I combined-cycle and the Flores II and III open-cycle) with a total installed capacity of 441 MW. Flores IV includes the expansion/conversion of the existing gas turbines in Flores II and III from open cycle to a combined cycle facility, by adding a new steam turbine generator, heat recovery steam generator and balance of plant equipment. Flores IV will utilize the waste heat from Flores II and III to provide 169 MW of additional capacity without using significant additional gas. After the project is completed, Termoflores will have two operating units (Flores I and Flores IV) with a generation capacity of 610 MW. The estimated construction time is 25 months and project completion must be attained before December 1, 2010. The project was granted a fixed 10-year period reliability charge payable over the firm capacity provided by the project.
Tribeca Partners SA
Tribeca Fund I (Tribeca or the Fund) is a new private equity fund planning to invest in majority stakes in medium-size growth companies based in Colombia and neighboring Latin American countries (Central America and Andean Region). The Fund plans to raise total capital commitments of $150-200 million.The Fund will be managed by Tribeca Capital Partners, a Bogota-based emerging manager, seeking to establish itself as one of the pioneering private equity groups in Colombia and as a future recognized regional private equity player. The team has an attractive mix of local knowledge and ability to originate and execute private equity transactions. The main sponsor of Tribeca is Interbolsa.Interbolsa is controlled by the Jaramillo, Maldonado and Sanint Families and is the first independent brokerage company in Colombia with $624 million in assets, $139 million equity as of July/07. IFC has recently closed an investment in Interbolsa, in which invested $10 million, for a 4.05% stake.
Tribeca Fund I investment, to help fund reach target, give comfort to local investors not familiar with FCPs, and ensure fund is structured to international standards to ensure best practices in particular in back office
Faith-based organization belonging to the global Congregation of Jesus and Mary (“CJM”), a mainstream and well-respected Catholic group, with activities throughout Latin America, including Colombia and Brazil. The group’s activities in Colombia are organized under Corporación El Minuto de Dios, a private not-for-profit company that focuses on underserved populations and delivers services relating to microfinance, housing, rural development, health, and education. Regarding shareholders, educational institutions in Colombia must be established as non-for-profit institutions, with the aim of reinvesting all of their net earnings. They do not have shareholders, do not distribute dividends and are tax exempt from income and equity taxes.
The total project cost over the 2009-2010 period is estimated at $18 million. The proposed IFC investment is a $8 million A loan for IFC’s own account.The physical infrastructure component of the investment program consists of three projects in Cundinamarca, including expansion of two key facilities in Bogota and Soacha, as well as construction of a new (phase 1) facility in Girardot. Land has been secured in all cases, and project planning is at advanced stages.Development impact: Increased Access to Tertiary Education Services – Colombia has made significant advances in gross enrollment ratios at all education levels over the past 5 years yet access and coverage for certain segments of the population remain weak. While average gross enrollment ratios for tertiary education are estimated at 29%, government data indicates that coverage in Bogota may exceed 50%, yet remain below 10% in various departments. Additionally, schooling has traditionally been less accessible to students of lower socioeconomic backgrounds. Through its network approach, commitment to distance learning technologies and presence in more than 11 departments, Uniminuto is expected to contribute to increased coverage for students in more remote areas of the country.
Women’s World Bank
Women’s World Banking (WWB) network in Colombia: WWB Bogota, WWB Cali, WWB Bucaramanga, WWB Medellin and WWB Popayán.
The total project cost is estimated at $20.0 million. IFC’s proposed investment consists of five separate local currency loans, reflecting the independent nature of the WWB affiliates. The five entities will be individually appraised and the investments will be tailored to the specific needs and circumstances of each entity. IFC’s financing will allow the affiliates to further expand their lending activities, diversify their funding sources and strengthen their position in the market. IFC’s financing will enable these entities to serve an additional 70,000 microentrepreneurs and thereby generate exceptional development impact in terms of employment generation and poverty reduction.