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

OVERVIEW OF THE PRIVATE EQUITY AND VENTURE CAPITAL INDUSTRY IN COLOMBIA February 2012 1

Contents I. Bancóldex II. The private equity industry in Latin America and Colombia III. Bancoldex Capital: Private Equity and Venture Capital Investment Program 2

Bancoldex, the Colombian Development Bank  State owned bank created in 1991 as a foreign trade bank (Eximbank)  Nowadays, Bancoldex is a second tier bank that 92% offers financial and non financial services 30%  Attending large companies, SMEs, micro financial institutions, etc. 89% 49% 86%  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 3

Contents I. Bancóldex II. The private equity industry in Latin America and Colombia III. Bancoldex Capital: Private Equity and Venture Capital Investment Program 4

In 2010, 483 funds raised USD 228 billion 31% of the capital was raised by Private Equity Funds, but 29% of the funds where Venture Capital Funds Fundraising 1988 – 2010 2010 Fundraising, by type 1228 140 1117 1074 948 818 89 88 729 695 663 646 636 71 583 550 536 492 482 483 46 384 345 36 32 28 280 27 25 25 25 245 246 228 217 20 205 191 17 181 157 11 143 139 10 133 134 7 68 95 101 101 5 5 4 8 10 11 6 12 17 32 35 53 88 62 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) No. funds raised Aggregate commitment (USD Bn) Source: 2011 Preqin Global Private Equity Report Source: 2011 Preqin Global Private Equity Report 5

Colombia is the 4th Latin American country, by fundraising Latin America represents 4% of global PE/VC, in terms of fundraising. Colombia represents 5 % of Latin America fundraising Global PE/VC Fundraising (USD 228 Bn) LATAM PE/VC Fundraising (USD 8 Bn) LATAM, USD 8 Bn, 4% Chile, USD Central Colombia, 28M , 0% Asia and America, USD 431M , rest of 5% USD 16M , world, USD 0% 33 Bn , 14% Peru, USD 553 M , 7% Mexico, USD 880 M , 11% North Regional, America, Brasil, USD USD 4,984M , 1,166 M , USD 137Bn , 62% 15% 60% Europe, USD 50Bn , 22% Source: 2011 LAVCA Industry Data . 2011 Preqin Global Private Equity Report 6

Colombia moved from the 7 th position to the 4 th in the LAVCA Scorecard Colombia has as friendly Private Equity environment. Main improvements are based in protecting minority shareholder rights and corporate governance LAVCA Scorecard 6 ‐ Year Trend Graph Colombia Year Overall score Ranking 77 4 th 2011 60 75 4 th 2010 60 5 th 2009 57 72 6 th 2008 53 7 th 2007 47 LAVCA Scorecard 2011 63 Rank Country Score UK 93 60 Israel 81 59 57 España 76 1 Chile 75 54 2 Brazil 72 3 Mexico 63 Taiwan 63 4 Colombia 60 47 47 5 Uruguay 57 43 43 6 Trinidad & Tobago 56 7 Costa Rica 54 41 40 8 Panamá 47 8 Perú 47 2006 2007 2008 2009 2010 2011 10 Argentina 43 10 El Salvador 43 12 República Dominicana 38 Source: LAVCA 2011 Scorecard 7

21 funds in Colombia with more than USD2 Billion of capital raised Closed Funds USD 2 billion Fundraising USD 556 millones Inversor 3 Cine Hispanoamericano 8 Energético Andino 15 Cacao 11 Progresa Capital 21 Forestal Colombia 26 Valor Forestal 10 SEAF FTC 34 Tribeca Natural Resources 40 Tribeca Homecare Fund 40 Tagua Capital 30 Escala Capital 42 Nexus Infraestructura I 53 Brilla Colombia 30 Access SEAF MAS 58 Fintra - Darby 83 Altra FCP I 105 MCD²F 35 TEKA 100 Kandeo 121 Axon-Amerigo 40 Tribeca Fund I 132 Tribeca Energy Fund 133 Infraestructura Ashmore 160 Valorar Futuro 50 Aureos 183 Hidrocarburos I, II y III 350 Infraestructura Brookfield 366 Victoria 350 0 100 200 300 400 0 100 200 300 400 8

Compound annual growth rate of 72% in capital commitments Amount by type of fund USD 2 billion Capital commitments USD 2 billion 2,500 8 800 9 9 1,889 676 7 8 2,070 700 662 7 2,000 7 6 600 6 5 500 1,500 5 4 400 1,098 350 4 4 3 3 3 1,000 300 3 3 3 2 148 637 200 2 2 2 40 121 500 8 26 40 244 100 1 1 1 1 1 1 1 1 79 79 0 - 0 - 2005 2006 2007 2008 2009 2010 2011 Cumulative annual amount No. Funds Capital commitments No. funds 9

80% of funds capital commitments is buyout oriented Funds closed by stage of business development  In Colombia there is only one venture capital fund with COP 40.000 million and 1,800 1,664 18 recently sold a biotech company 1,600 16 16  Infrastructure funds represent 32% of total 1,400 14 capital commitments 1,200 12 1,000 10  Colombia has two major challenges: to 800 8 develop the venture capital industry and 600 6 to offer investment resources for early- 386 stage companies 400 4 4 21 200 2 1 0 - Seed Capital Venture Capital Private Equity Capital commitments No. funds 10

Business model for PE fund under Colombian legislation Private equity and venture capital funds are regulated by Decree 2555 of 2010 Private equity and venture capital business model in Colombia Limited partner Secuirities $ Trust (Back office) Limited partner assembly Manage Private equity / venture capital fund Limited partner advisory General partner committee Investment committee $ $ $ EXIT STRATEGY Governance External audit - Management company buy back - Selling to strategic investor Enterprise 1 Enterprise 2 Enterprise 3 - IPO 11

International General Partners Ashmore Investment Management Limited (UK)- Ashmore International Infraestructure Colombia General Partners 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) 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 12

International investors with investments in Colombia Equity International, private equity firm focused on growth countries General outside the U.S. Partners and International Investors HSBC Capital, investment banking subsidiary of HSBC Bank Riverwood Capital, private equity firm Citi Venture Capital International , manager of private equity funds focused on emerging market 13

Main investors Multilateral Investment Fund, a member of Inter-American Multilateral Development Bank (IDB) Corporación Andina de Fomento, development bank of Latin America International Finance Corporation, a member of the World Bank Group Inter-American Investment Corporation, member of the Inter- American Development Bank (IDB) Other Norfund, Norwegian investment fund for developing countries International entities FMO, entrepreneurial development bank of the Netherlands Mexican Chamber of Private Equity Investment – Fund of Funds Spanish development finance institution UK ’ s development finance institution Investment through the Secretary of State for International Cooperation (SECI) The Swiss Investment Fund for Emerging Markets 14

Main Investors Colombian Pension fund, member of Grupo AVAL Pension funds Pension fund, member of Grupo Empresarial Antioqueño Pension fund, member of Grupo BBVA Pension fund, member of Grupo Colpatria Pension fund, member of Grupo Suramericana de Inversiones Pension fund, member of Grupo Financiero Old Mutual Insurance Seguros Bolívar, general and life insurance company Companies actively Suramericana S.A., insurance company member of Grupo de Inversiones investing Suramericana Global Seguros, Colombian insurance company 15

Main Investors Colombian The Colombian development bank Development Banks Finagro, fund for agricultural financing Findeter, development bank that finances investment initiatives that contribute to infrastructure development Corporación Financiera Colombiana S.A., member of Grupo AVAL Other investors Banca de inversión, member of Grupo Bancolombia, which is part of Grupo Empresarial Antioqueño Argos, productora y comercializadora de cemento y concreto, miembro de Inverargos, miembro del Grupo Empresarial Antioqueño Grupo de Inversiones Suramericana holding company, member of Grupo de Inversiones Suramericana, which is part of Grupo Empresarial Antioqueño 16

Pension funds looking to invest in PE funds Assets under management of obligatory pension Since August 2010, the obligatory pension funds in Colombia (USD MM) before multifondos funds change to a Multi funds model. The investment limits of the multi funds are: 60,000 52,110 180% 51,148  Higher risk pension fund: up to 7% 50,000  Moderate risk pension fund: up to 5%  Conservative risk pension fund: 0% 130% 37,053 40,000 29,690 30,000 24,596 80% 20,000 41% 30% 25% 21% 10,000 -2% 0 -20% 2007 2008 2009 2010 Sep-11 Obligatory funds % Growth obligatory 17