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INVESTMENT FUNDS

 

Financial solutions through equity and quasi-equity in which Bancóldex acts as a limited partner (investor) in private equity funds, as well as promoter of the local and regional industry.

 

A private equity fund is an investment instrument that pools third-party resources to provide long-term financing to companies (or projects) through equity or quasi-equity instruments. However, its goal goes beyond deployment capital into companies, the fund is a value-generation mechanism or "smart money".

Every fund has an expert investment management team (General Partner), who oversees the selection the companies and projects that receive the fund's resources, always with the aim of obtaining a return from the value generation in them.

Types of funds

Various types of funds are usually grouped under the category of Private Equity; for example, these can be differentiated according to the stage of maturity of the companies in which they invest, including:

  • Buyout and Growth Funds: funds that invest in companies with a proven market track record that require resources, mainly, for consolidation and / or expansion into new markets. These funds usually acquire the entire equity of the company, or a majority position

  • Venture Capital Funds: funds that invest in innovative companies, which are in the initial stages of operation, have a minimum viable product, and require resources for their growth. These funds tend to acquire minority positions within the capital of the venture and are highly involved in its management.

  • Impact Funds: funds that seek, in addition to financial profitability, a positive social or environmental impact. They primarily invest in early-stage companies, whose business models have been built around achieving a positive social or environmental impact. These funds usually accompany their investment with a technical assistance solution.

Although the main investment instrument of a fund is equity or quasi equity, they can also use debt instruments to finance companies. Thus, there are funds dedicated exclusively to financing companies through Private Credit. These may be focused on: i) ventures that are not served by the traditional financial system or ii) mature companies that already have high bank indebtedness and require another source of financing. The debt of a private credit fund tends to differ from that of the traditional financial system, in that it is long-term, structured, and with more complex guarantee mechanisms.

Colombia

The foundations of the private equity industry in Colombia began to be forged in 2005, based on the first regulatory guidelines that would later allow, in 2010, the issuance of Decree 2555, which dictates the general rules under which they must operate, as well as the minimum corporate governance bodies, and the rights and obligations of each party involved.

Standard model of a fund in Colombia

With the aim of contributing to the development of the local private equity ecosystem, Bancóldex has promoted:

Best Practices for Institutional Investors

Education for potential local investors (+50)

Course for investors in private equity funds

  • May 2016 Universidad de los Andes

  • May 2019 Universidad EAFIT and ColCapital

Member since 2010 of the Institutional Limited Partners Association - ILPA 

Member since 2010 of the Association for Private Capital Investments in Latin America – LAVCA

Strengthening General Partners

Three versions of the International Venture Capital and Private Equity Program

  • Over 200 people trained by Josh Lerner, director of the Private Capital Research Institute (PCRI), and professor in Investment Banking at Harvard Business School

Emerging General Partners Program

  • March 2020 in alliance with ColCapital

Connection of companies with sources of capital

Three versions of the Venture Forum (Bogotá, Pereira, Bucaramanga) to generate connections between companies and funds

  • More than 80 companies trained, meetings with 80 investors, with an attendance of more than 600 people

  • Six companies have received investment between USD 200,000 and USD 3,000,000

Awareness about private equity funds for entrepreneurs and unions, nationwide

Investment Promotion in Colombia

Sponsorship of events in Colombia and abroad on private equity funds

6 versions of the Catalog of Private equity and Venture Capital Funds. Replaced in 2017 by ColCapital’s Private Equity Industry Yearbook (https://en.colcapital.org/yearbook/)

Booklet on Private Equity Funds for entrepreneurs

Additionally, in 2012, in conjunction with IDB Lab and supporting 26 general partners, Bancóldex promoted the creation of the Colombian Association of Private Capital - ColCapital, whose mission is to “Encourage, develop and promote in an integral way the industry of Private Equity Funds in Colombia, as an engine of collective savings and economic growth, under the highest management standards”.

You can find more information about private equity funds in Colombia on the association`s website COLCAPITAL

Private equity funds are a strategic ally in the growing path of business. The companies that receive an investment from a fund additionally obtain a value-added scheme, such as the implementation of good practices in corporate governance, knowledge in human talent management, expansion of business networks, support in business administration, among others.

This value-added scheme is also called “smart money”

 

Common characteristics that funds look for in a company

Private equity funds seek to invest in companies to obtain profitability from the generation of value in them, so the following are examples of criteria that a fund evaluates when investing in a company:

1 •

Clear and well-defined market opportunities

4 •

 

Management team committed and open to change

7 •

Willingness to share strategic decision-making with others

2 •

High growth potential

5 •

 

Innovative products, services and / or business models

8 •

 

Willingness to disclose sensitive information on all relevant aspects of the organization

3 •

Business scalability

6 •

Willingness to assign shareholding

9 •

Que estén dispuestas a aceptar un socio que inyecta capital, pero que venderá su participación accionaria, incluso a terceros

Likewise, each fund has an investment policy, which defines the principal aspects that they consider selecting potential investments, for example: economic sectors, minimum size and level of sales of the company, stage of development of the company, geographic coverage, and targeted shareholding participation of the fund in the company (majority or minority).

If you are a company and want to know more about the most common characteristics that private equity funds look for in companies, as well as where to contact them, please consult the following booklet:

https://www.bancoldex.com/sites/default/files/cartilla_fondos_de_capital.pdf

Also, you can find additional information on general partners and funds operating in the country, through the Colombian Association of Private Capital, ColCapital, at: https://colcapital.org/

Businesses and funds connection

As part of Bancóldex commitment to generate connections between businesses and alternative sources of capital; we invite those companies that consider private equity funds as a potential ally for their growth to fill out the following form, which aims to collect relevant business information, to be shared with general partners operating in Colombia.

Connection Form

* Bancóldex acts as a connection bridge, but whoever decides whether to contact the company will be the general partner of the fund, who will review the information, and if it matches its policies and investment objectives, will contact the company directly.

BANCOLDEX CAPITAL FUND OF FUNDS

Bancóldex Capital Fund of Funds allows the mobilization of resources of different kind of investors towards the Private Equity industry in Colombia and the region (Latin America), and thus develop alternative financing mechanisms for entrepreneurs and companies.

 

 

 

 

 

 

 

 

 

 

 

Bancóldex acts as the General Partner, selecting and monitoring investments in underlying private equity funds. Likewise, it provides resources to the vehicle, as an anchor investor.Proven investment experience - Bancóldex

 
 
 
 

The bank has more than 12 years of investment experience, being a pioneer in the local private equity industry, which has allowed it to participate in the growth of different Colombian and regional companies

Investments in 16 private Equity funds

  • 156 companies impacted

  • COLOMBIA:   83 companies

Other relevant figures:

   $ Average investment in COL: COP 15.007 m / company

 Distribution by company’s size:

  • Micro – 9.9%    Medium – 32.4%
  • Small – 25.4%   Large – 32.4%

Average 198 employees / company

Gender. Women are:

  • 35% of total Jobs
  • 25% of senior management positions

To achieve the stated investment objectives, Bancóldex has the following strategic pillars:

  • Robust investment process that aims to evaluate the investment opportunities considering five main vertices: team, investment policy, track record, processes and, terms and conditions.

  • Investment Committee composed of expert and independent members that generate value in investment decision making process.

  • Detailed monitoring and follow-up process for each investment, their underlying assets, and general partners.

  • Seasoned investment professionals.

Investment Strategist

Bancóldex Capital Fund of Funds allows the investor to choose between various investment theses, according to their strategic interests:

  • Capital to Grow (ESP: “Capital para Crecer”)

Investment in Growth and Acquisition (buyout) Funds

Funds that invest, through debt or equity, in medium and large companies, with proven market track record, that require resources mainly for consolidation and expansion plans at a regional or global level.

  • Capital for Entrepreneurs (ESP: “Capital para Emprender”)

Investment in Venture Capital Funds:

Funds that invest, through debt or equity, in innovative early-stage companies that have financed their first operational phases, have a proven product and have achieved their first income.

  • Impact Capital (ESP: “Capital de Impacto”)

Investment in Impact Funds:

Funds that invest, through debt or equity, in companies, usually early stage, whose business models allow positive social or environmental impact

  • Private Credit (ESP: “Deuda Privada”)

Investment in Private Credit Funds:

Funds that carry out private credit transactions (senior, subordinate, with or without guarantee, mezzanine, among others) to companies with a track record in the market.

In general, the targeted funds must meet the following minimum characteristics:

 

Geography

Funds that invest in Colombia at least 2x the commitment of the Fund of Funds

Sectors

Funds that invest in companies of commerce, services, tourism and industry

Colombia

General partners actively involved in the local private equity ecosystem

 

Legal Structure

Vehicles structured as Colombian private equity funds (Decree 2555, 2010), or similar structure abroad (limited partnerships)

Team

Professionally recognized team with proven experience (track record).

Adequate corporate governance

 

Other investment terms

Commitment size

USD 500k to USD 10 million

 

Maximum participation

25% of the fund’s size

 

Commitment currency

COP or USD

 

  • If you are a general partner looking for limited partners, contact us to learn about your investment proposal.

Investment opportunity

Bancóldex Capital Fund of Funds is open to different types of investors, local and international, which allows them, among other things:

Facilitate identification and access to funds managed by appropriate managers

The private equity funds market is increasingly competitive, with a continuous increase in the number of general partners (GP) and funds available to the investors. Thus, there is greater difficulty in identifying and selecting suitable GPs. In this sense, Bancóldex has extensive experience in the selection of GPs and active relationships with the stakeholders of the industry.

Get capital scale

Access to private equity funds sometimes requires significant amounts of capital commitments and additional costs associated with human, physical and technological resources to execute the search, analysis, investment, and monitoring processes.

 

The investment in the Fund of Funds allows to overcome these limitations that may have some investors who are considering this type of asset as an alternative to complements their investment portfolio

 

Diversify its portfolio

The structure of the Fund of Funds allows the investor, regardless of the size of the commitment, to have a diversified underlying portfolio (private equity funds). Thus, through Bancóldex Capital Fund of Funds the investor will be able to access different:

 

  • Strategies: venture, growth, credit, impact

  • Sectors: trade, industry, tourism, and services

  • Geographies: Colombia and Latin America

  • Vintage (year in which a fund starts operating): to mitigate exposure to economic cycles

  • General Partners: the investment in funds of the same General Partner will be maximum 30% of the commitments

  • Funds: no fund will weigh more than 30% of the commitments

  • If you are an investor looking for investment opportunities in private equity funds, contact us to learn about our value proposition.

 

Bancóldex has a team exclusively dedicated to the management of Bancóldex Capital Fund of Funds. This is responsible for assessing investment proposals in private equity funds and presenting them for approval by the Investment Committee, as well as managing and monitoring the current portfolio.

The team has a joint experience of more than 40 years related to private equity funds.

 

Claudia M. González

 

 

Vice-President - Financial Vice-Presidency

 

Industrial Engineer from Los Andes University specialized in financial management with emphasis on the treasury department, and financial and stock market sector.

She has served as Treasury Manager and Financial Vice-President at Bancóldex. She has led investments, trading, fundraising, portfolio disbursements and new product strategies. She is also responsible for Bancóldex' financial and tax planning, as well as for its financial projections.

She is responsible for the Department of Capital Funds and provides support to the team in investment decision-making and portfolio monitoring.

 

 

 

Ana Margarita Coronado Gomez

 

 

Director - Department of Private Equity Funds

 

Business Administrator specialized in Corporate Finance, Executive MBA from Pontificia Universidad Católica del Perú, EADA Business School and University of Miami. Certification from the Venture Capital Institute Program in Atlanta.

She has 24-year experience in private banking and pension funds. She has 5-year experience in corporate credit and worked as Director of Credit Risk at AFP Colfondos for 12 years. She was responsible for risk control of the managed portfolios, including investments in capital funds. She joined Bancóldex as the Director of the Department of Private Equity Funds in May, 2013 to lead Bancóldex’ Capital program and represent the bank in the Investors' Meetings and the Surveillance Committees.

As a Key Member, she will devote all the necessary time to administer the affairs of the Fund according to the level of diligence required from an expert private equity fund manager.

 

 

Guillermo Martínez Rojas

 

 

Head - Department of Private Equity Funds

 

Professional in Finance and International Relations. Master’s degree in Business Administration from Anáhuac University.

He has 11-year experience in investment banking, commercial banking, pension administration, and development banking. He has over 6-year relevant experience in Capital Funds through the study, monitoring and follow-up of national and international Capital Funds with different approaches, including buyout, infrastructure, senior debt, mezzanine, and real estate, as well as secondary funds and funds of funds.

He is the leader of the Executive team at Bancóldex. Therefore, he ensures the comprehensive assessment of capital funds that meet the criteria of Bancóldex’ Capital program or Fund of Funds in order to have an optimal construction of an investment portfolio and a timely follow-up of its performance.

 

 

 

 

Miryam Orjuela Garavito

 

 

Executive - Department of Private Equity Funds

 

Economist with a Master's Degree in Economics from Pontificia Javeriana University.

He has 10-year experience in financial risk analysis, asset valuation, investment portfolio and private equity funds. He worked as a team leader at AFP Porvenir for 5 years and was responsible for the identification, measurement, control and monitoring processes of risks related to local and international Private Equity and Equity Funds.

He is responsible for executing the search, selection and due diligence processes for capital funds at Bancóldex. He also follows up the performance of that same portfolio.

 

 

 

   Jaime E. Diaz

 

Executive - Department of Private Equity Funds

 

Economist specialized in international finance from La Sabana University and applicant for a Master's degree in Economics from the National University of Colombia.

He has 7-year experience in the Colombian financial sector - AFP Skandia. He was responsible for assessing, structuring, monitoring and controlling local and international private equity funds and other types of alternative assets.

He is responsible for executing the search, selection and due diligence processes for capital funds at Bancóldex. He also follows up the performance of that same portfolio.

 

 

 

 

Natalia Segovia Rojas

 

Executive - Department of Private Equity Funds

 

Business Administrator and Master in Finance with Cum Laude distinction from Los Andes University.

She has held positions in investment banking and pension fund management companies during the last 4 years. She has relevant experience in managing the portfolio of institutional investors and family wealth, focused on private equity, real estate and infrastructure funds. She worked as part of the investment team at AFP Porvenir for 3 years and was responsible for activities such as analyzing local equities, studying and monitoring private equity funds, developing investment strategies and following up the alternative investment portfolio.

She is responsible for executing the search, selection and due diligence processes for capital funds at Bancóldex. She also follows up the performance of that same portfolio.

 

 

 

 

Rafael E. Salas Suspes

 

 

 

 

Executive - Department of Private Equity Funds

 

Business Administrator with an MBA from the Business School of Rotterdam, Holland.

He has 9-year experience in valuation and management of stock-market investments and private equity funds. He worked as a local Equity Fund Manager and Director of the Alternative Investments portfolio at AFP Colfondos for 4 years. He also has 4-year experience as an Analyst and Partner in local private equity fund managers (SEAF Colombia and MAS Equity Partners).

He is responsible for executing the search, selection and due diligence processes for capital funds at Bancóldex. He also follows up the performance of that same portfolio.

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