OVERVIEW OF THE PRIVATE EQUITY AND VENTURE CAPITAL INDUSTRY IN - - PowerPoint PPT Presentation

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OVERVIEW OF THE PRIVATE EQUITY AND VENTURE CAPITAL INDUSTRY IN - - PowerPoint PPT Presentation

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OVERVIEW OF THE PRIVATE EQUITY AND VENTURE CAPITAL INDUSTRY IN COLOMBIA February 2012 1 Contents I. Bancldex II. The private equity industry in Latin America and Colombia III. Bancoldex Capital: Private Equity and Venture Capital

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OVERVIEW OF THE PRIVATE EQUITY AND VENTURE CAPITAL INDUSTRY IN COLOMBIA

February 2012

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I. Bancóldex II. The private equity industry in Latin America and Colombia III. Bancoldex Capital: Private Equity and Venture Capital Investment Program

Contents

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  • State owned bank created in 1991 as a foreign

trade bank (Eximbank)

  • Nowadays, Bancoldex is a second tier bank that
  • ffers financial and non financial services
  • Attending large companies, SMEs, micro

financial institutions, etc.

  • USD 2.800 millions in assets, and USD 766 millions

in equity

  • SINCE 2009, BANCOLDEX IS INVESTING IN

PRIVATE EQUITY AND VENTURE CAPITAL FUNDS, THOUGH BANCOLDEX CAPITAL PROGRAM

89% 86% 49% 30% 92%

Bancoldex, the Colombian Development Bank

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I. Bancóldex II. The private equity industry in Latin America and Colombia III. Bancoldex Capital: Private Equity and Venture Capital Investment Program

Contents

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In 2010, 483 funds raised USD 228 billion

Source: 2011Preqin Global Private Equity Report

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Source: 2011Preqin Global Private Equity Report 68 95 101 62 101 133 181 217 280 384 492 583 818 695 663 550 729 948 1117 1228 1074 482 483 8 10 11 6 12 17 32 35 53 88 139 157 245 191 143 134 205 345 536 646 636 246 228 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

  • No. funds raised

Aggregate commitment (USD Bn)

Fundraising 1988 – 2010

89 88 140 25 28 17 46 20 5 25 71 36 32 27 25 11 10 7 4 5

  • No. funds raised

Aggregate commitment (USD Bn)

2010 Fundraising, by type

31% of the capital was raised by Private Equity Funds, but 29% of the funds where Venture Capital Funds

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Latin America represents 4% of global PE/VC, in terms of fundraising. Colombia represents 5 % of Latin America fundraising

Source: 2011 LAVCA Industry Data . 2011 Preqin Global Private Equity Report

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Colombia is the 4th Latin American country, by fundraising

North America, USD 137Bn , 60% Europe, USD 50Bn , 22% Asia and rest of world, USD 33 Bn , 14% LATAM, USD 8 Bn, 4% Global PE/VC Fundraising (USD 228 Bn)

Regional, USD 4,984M , 62% Brasil, USD 1,166 M , 15% Mexico, USD 880 M , 11% Peru, USD 553 M , 7% Colombia, USD 431M , 5% Chile, USD 28M , 0% Central America, USD 16M , 0%

LATAM PE/VC Fundraising (USD 8 Bn)

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LAVCA Scorecard 2011 Rank Country Score UK 93 Israel 81 España 76 1 Chile 75 2 Brazil 72 3 Mexico 63 Taiwan 63 4 Colombia 60 5 Uruguay 57 6 Trinidad & Tobago 56 7 Costa Rica 54 8 Panamá 47 8 Perú 47 10 Argentina 43 10 El Salvador 43 12 República Dominicana 38

Colombia has as friendly Private Equity environment. Main improvements are based in protecting minority shareholder rights and corporate governance

Source: LAVCA 2011 Scorecard

Colombia moved from the 7th position to the 4th in the LAVCA Scorecard

Colombia Year Overall score Ranking 2011 60 4th 2010 60 4th 2009 57 5th 2008 53 6th 2007 47 7th

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77 75 59 72 54 63 43 60 40 57 47 47 41 43 2006 2007 2008 2009 2010 2011

LAVCA Scorecard 6‐Year Trend Graph

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366 350 183 160 133 132 121 100 105 83 58 53 42 40 40 34 26 21 15 8 3 100 200 300 400 Infraestructura Brookfield Hidrocarburos I, II y III Aureos Infraestructura Ashmore Tribeca Energy Fund Tribeca Fund I Kandeo TEKA Altra FCP I Fintra - Darby Access SEAF MAS Nexus Infraestructura I Escala Capital Tribeca Homecare Fund Tribeca Natural Resources SEAF FTC Forestal Colombia Progresa Capital Energético Andino Cine Hispanoamericano Inversor

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Closed Funds USD 2 billion

21 funds in Colombia with more than USD2 Billion of capital raised

350 50 40 35 30 30 10 11 100 200 300 400 Victoria Valorar Futuro Axon-Amerigo MCD²F Brilla Colombia Tagua Capital Valor Forestal Cacao

Fundraising USD 556 millones

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148 8 26 40 662 121 676 40 350 2 1 1 1 4 1 9 1 1

  • 1

2 3 4 5 6 7 8 9 100 200 300 400 500 600 700 800 Capital commitments

  • No. funds

79 79 244 637 1,098 1,889 2,070 2 3 3 3 7 3

  • 1

2 3 4 5 6 7 8 500 1,000 1,500 2,000 2,500 2005 2006 2007 2008 2009 2010 2011 Cumulative annual amount

  • No. Funds

Compound annual growth rate of 72% in capital commitments

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Capital commitments USD 2 billion Amount by type of fund USD 2 billion

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386 21 1,664 4 1 16

  • 2

4 6 8 10 12 14 16 18 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Seed Capital Venture Capital Private Equity Capital commitments

  • No. funds

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80% of funds capital commitments is buyout oriented

  • In Colombia there is only one venture

capital fund with COP 40.000 million and recently sold a biotech company

  • Infrastructure funds represent 32% of total

capital commitments

  • Colombia has two major challenges: to

develop the venture capital industry and to offer investment resources for early- stage companies

Funds closed by stage of business development

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Trust (Back office) General partner Enterprise 1 Enterprise 2 Enterprise 3

  • Management company

buy back

  • Selling to strategic

investor

  • IPO

EXIT STRATEGY

$

$ $ $

Limited partner assembly Limited partner advisory committee Investment committee External audit Governance Secuirities

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Private equity / venture capital fund

Business model for PE fund under Colombian legislation

Private equity and venture capital funds are regulated by Decree 2555 of 2010

Limited partner

Private equity and venture capital business model in Colombia

Manage

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12 International General Partners

Ashmore Investment Management Limited (UK)- Ashmore Infraestructure Colombia Brookfield Asset Management Inc (Canada) Darby Overseas Investments, Ltd., the private equity arm of Franklin Templeton Investments SEAF (US Management Company) Aureos Latin America Managers – Aureos (UK)

International General Partners

Advent International, global private equity firm Southern Cross Group, private equity firm focused on Latin America Linzor Capital, private equity firm focused on Latin America Victoria South American Partners, private equity firm focused on South America HarbourVest , global private equity firm

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General Partners and International Investors

Equity International, private equity firm focused on growth countries

  • utside the U.S.

HSBC Capital, investment banking subsidiary of HSBC Bank Riverwood Capital, private equity firm

International investors with investments in Colombia

Citi Venture Capital International , manager of private equity funds focused on emerging market

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14 Multilateral

Spanish development finance institution FMO, entrepreneurial development bank of the Netherlands Inter-American Investment Corporation, member of the Inter- American Development Bank (IDB) Corporación Andina de Fomento, development bank of Latin America Multilateral Investment Fund, a member of Inter-American Development Bank (IDB) International Finance Corporation, a member of the World Bank Group UK’s development finance institution Investment through the Secretary of State for International Cooperation (SECI) Norfund, Norwegian investment fund for developing countries

Other International entities

Main investors

The Swiss Investment Fund for Emerging Markets Mexican Chamber of Private Equity Investment – Fund of Funds

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15 Colombian Pension funds

Pension fund, member of Grupo AVAL Pension fund, member of Grupo Empresarial Antioqueño

Main Investors

Pension fund, member of Grupo BBVA Pension fund, member of Grupo Suramericana de Inversiones Pension fund, member of Grupo Financiero Old Mutual Pension fund, member of Grupo Colpatria Global Seguros, Colombian insurance company Suramericana S.A., insurance company member of Grupo de Inversiones Suramericana

Insurance Companies actively investing

Seguros Bolívar, general and life insurance company

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Main Investors

Colombian Development Banks

Findeter, development bank that finances investment initiatives that contribute to infrastructure development Finagro, fund for agricultural financing The Colombian development bank Grupo de Inversiones Suramericana holding company, member of Grupo de Inversiones Suramericana, which is part of Grupo Empresarial Antioqueño

Other investors

Argos, productora y comercializadora de cemento y concreto, miembro de Inverargos, miembro del Grupo Empresarial Antioqueño Banca de inversión, member of Grupo Bancolombia, which is part of Grupo Empresarial Antioqueño Corporación Financiera Colombiana S.A., member of Grupo AVAL

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24,596 29,690 37,053 52,110 51,148

21% 25% 41%

  • 2%
  • 20%

30% 80% 130% 180% 10,000 20,000 30,000 40,000 50,000 60,000

2007 2008 2009 2010 Sep-11 Obligatory funds % Growth obligatory

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Pension funds looking to invest in PE funds

Since August 2010, the obligatory pension funds change to a Multi funds model. The investment limits of the multi funds are:

  • Higher risk pension fund: up to 7%
  • Moderate risk pension fund: up to 5%
  • Conservative risk pension fund: 0%

Assets under management of obligatory pension funds in Colombia (USD MM) before multifondos

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Voluntary pension funds looking to invest in PE funds

The voluntary pension funds could invest up to 10% in private equity funds local and foreign

2,855 3,273 3,752 5,143 5,194 15% 15% 37% 1%

  • 20%

30% 80% 130% 180% 1,000 2,000 3,000 4,000 5,000 6,000

2007 2008 2009 2010 Oct-11 Voluntary funds % Growth voluntary

Assets under management of voluntary pension funds in Colombia (USD MM)

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Source: Colombia Financial Superintendence report, September 2011

Insurance companies as new LPs

Since August 2010, the investment limits on

  • f the Insurance Companies to invest in

private equity are: Life insurance

  • Local PE funds up to 5% on the value
  • f reserves
  • Abroad PE funds up to 5% on the

value of reserves General insurance

  • Local PE funds and abroad funds up

to 5% on the value of reserves Earthquake insurance

  • Abroad funds up to 5% on the value
  • f reserves

675 769 753 915 1,074

714 1,199 1,216 1,525 1,816 14%

  • 2%

22% 17% 68% 1% 25% 19%

  • 20%

30% 80% 130% 180% 230% 280%

  • 200

400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

2007 2008 2009 2010 Jun-11 General insurance Life insurance % Growth general insurance % Growth life insurance

Reserves of life and general insurance companies in Colombia (USD MM)

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I. Bancóldex II. The private equity industry in Latin America and Colombia III. Bancoldex Capital: Private Equity and Venture Capital Investment Program

Contents

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21 Since 2009, 28 funds have been analyzed by Bancoldex. Four fund investments have been for USD 37M, in multi sector funds, venture capital and infrastructure funds

16 8 4 2009 2010 2011

Funds under Preliminary Due Diligence (28)

4 8 7 2009 2010 2011

Funds under Due Diligence (19)

Actively investing in Private Equity and Venture Capital funds

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22 Outsourcing Services, Information Technology, Biotechnology, Clean Energy, Digital Animation, Tourism, Power generation , Logistics are some of the sectors backed by Bancoldex investments in funds

  • 20 companies have been back, 12 of

them are in Colombia

  • 33% of the capital have been invested in

service companies

  • 28% in Information technology and

telecommunications companies

  • There is a recent successful exit of a

biotechnology firm (agribusiness)

Funds’ s portfolio companies in diverse sectors

ITC, 69,350, 28% Housing, 5,425, 2% Retail, 21,428, 9% Tourism, 15,510, 6% Services, 84,058, 33% Oil&Gas Services, 30,617, 12% Energy, 22,504, 9% Biotechnolo gy, 2,978, 1%

Fund investments by sector

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Private equity funds / Venture capital funds (early stage and growth capital) Local and international funds that invest in Colombia at least 2 times Bancóldex investment commitment into the fund. GPs local presence preferred Industry, services, trade and tourism USD 10 million (VC) ; USD 15 million (PE) Up to USD 10 million per fund (maximum 20% of the fund) Foreign law applicable for international PE funds ; Colombian regulation for local funds (Decree 2555 of 2010) Experienced Management Teams and track record preferred. Proper corporate governance structure Full fund preferred Funds with risk diversification strategies Financial services companies, supervised the Superintendence of Finance in Colombia, ii) Microcredit companies in Colombia, iii) weapons, gambling or similar and iv) ideas or business plans Stage Geography Sectors Minimum fund size Bancoldex investment Funds regulatory framework Track record and experienced GPs Waterfall distribution Diversification Exclusions

Broader investment strategy moving forward to VC funds and INNOVATION

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Technical Assistance Program to build the PE/VC ecosystem

Fund Managers (GPs) Investors in funds (LPs) Enterprises

Ecosystem

  • Supporting the

creation of a PE/VC Institute for Latin America

  • Creating the Colombian

PE/VC Association

  • Encouraging best

practices

  • Promoting PE/VC funds

as an asset class among new potential investors

  • Promoting best

practices among LPs

  • Implementing

Corporate Governance best practices

  • Venture forums to

connect companies with PE/VC funds

  • Proposing a friendly

regulatory framework

  • Sponsoring events
  • Disseminating

information (web portal , and news letters)

To promote the development of the PE/VC industry in Colombia, we concentrate on four pillars: SINCE THERE IS NO PRIVATE EQUITY OR VENTURE CAPITAL ASSOCIATION, BANCOLDEX ACTS AS THE COLOMBIAN PE/VC ASSOCIATION

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Santiago Rojas Arroyo Chief Executive Officer Tel: (57) (1) 2 86 80 93 santiago.rojas@bancoldex.com Bogotá-Colombia

Contacts

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