OVERVIEW  OF  THE  PRIVATE  EQUITY  AND  VENTURE  CAPITAL  INDUSTRY  IN  COLOMBIA  

February  2013  

1.   Bancóldex  2.  The  private  equity  industry  in  La9n  America  and  Colombia  

3.  Bancoldex  Capital:  Private  Equity  and  Venture  Capital  Investment  Program  

CONTENTS  

  A  state  owned  bank  created  in  1991  as  a  foreign  trade  

bank  (Eximbank)  

  Today,  Bancoldex  is  a  second  9er  bank  that  offers  financial  and  non  financial  services,  to  large  companies,  SMEs,  and  

micro  financial  ins9tu9ons,  among  others  and  promotes  

entrepreneurial  development  

  USD  3.069  millions  in  assets,  and  USD  694  millions  in  

equity  

  SINCE  2009,  BANCOLDEX    IS  INVESTING  IN  PRIVATE  EQUITY  AND  VENTURE  CAPITAL  FUNDS,  THROUGH  THE  

BANCOLDEX  CAPITAL  PROGRAM  

89% 86% 49%

30%

92%

Bancoldex,  the  Colombian  Development  Bank    

CAPITAL

1.  Bancóldex  2.   The  private  equity  industry  in  LaUn  America  and  Colombia  

3.  Bancoldex  Capital:  Private  Equity  and  Venture  Capital  Investment  Program  

CONTENTS  

In  2011,  616  funds  raised  USD  266  billion  

Source:  2012  Preqin  Global  Private  Equity  Report   Source:  2012  Preqin  Global  Private  Equity  Report  

37%  of  the  capital  was  raised  by  Private  Equity  Funds.  22%  of  the  funds  where  Venture  Capital  Funds  

280

384

492

583

818

695 663

550

729

948

1117

1228

1074

482

730

616

53 88

139 157

245 191

143 134 205

345

536

646 636

246 275 266

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

No. funds raised Aggregate commitment (USD Bn)

Annual  private  equity  and  venture  capital  fundraising  1996  –  2011  

159

115

134

28 27 18

75

21

10

29

91

44

31

16 26

10 16 14

7 11

No. funds raised Aggregate commitment (USD Bn)

Fundraising  in  2011  by  fund  type  

5  

La9n  America   represents   5%  of   global   fundraising   in   PE/VC.   Colombia   represents   1%     of   the   total   fundraising   of   La9n  

America  

Source:  2012  Preqin  Global  Private  Equity  Report  

Colombia  is  the  4th  LaUn  American  country,  by  fundraising  

Regional  USD  1.2    12%  

Brazil  USD  8.1    79%  

Mexico  USD  0.4    4%  

Peru  USD  0.5    4%  

Colombia  USD  0.1    1%  

Central  America  USD  0.0    0%  

LATAM    PE/VC  Fundraising  (USD  13.7  Bn)  

Source:  2012  LAVCA  Industry  Data  

North  America  USD  146.5    

55%  Europe  USD  59.5    23%  

Asia  and  rest  of  world  USD  45.9    17%  

LATAM  USD  13.7    

5%  

Global  PE/VC  Fundraising  (USD  266Bn)  

6  

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 Argen9na 43 10 El  Salvador 43 12 República  Dominicana 38

Colombia  has  a  friendly  Private  Equity  environment,  with   improvements   in  the  protec9on  of  minority  shareholder  rights  

and  corporate  governance  

Source: LAVCA 2011 Scorecard

Colombia  moved  from  the  7th  posiUon  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

7  

77 75

59

72

54

63

43

60

40

57

47 47

41

43

2006 2007 2008 2009 2010 2011

LAVCA Scorecard 2006-2011

32  funds  in  Colombia  with  USD  3,4  Billion  of  capital  raised  

*:  In  process  *:  Funds  with  par9al  closed  

402 350

220 200

193 186 184

156 152

133 132 129 127

111 105

91 83

71 46 46 42 40 39 34 32 31 26 24 23 19

7 7

0 200 400

Infraestructura Brookfield Hidrocarburos I, II y III

Infraestructura Ashmore Terranum Capital*

Altra FCP II** Inverlink Estructuras Inmobiliarias

Aureos Inmobiliario Colombia

TEKA Tribeca Energy Fund

Tribeca Fund I Kandeo

Nexus Infraestructura I Inmobiliario Ultrabursátiles

Altra FCP I Fintra - Darby

OXO* Access SEAF MAS

Energético Andino Escala Capital

Tribeca TC Dorado Fund Tribeca Homecare Fund

Tribeca Natural Resources SEAF FTC

Brilla Colombia Valorar Futuro*

Forestal Colombia MCD²F*

Progresa Capital Santander Inmobiliario*

Cine Hispanoamericano Inversor

Closed  Funds  (USD  3.4  billion)  

400

150

60

50

50

40

30

15

12

11

0 100 200 300 400 500

Tribeca

Aureos II

Diana Capital

EPM

AX Ventures

Axon-Amerigo

IVG

CFB Biofund I

Cacao

Valor Forestal

Bamboo Finance

Caseif*

Promision*

Austral*

90° Norte*

Funds  in  fundraising  (USD  828  million)  Minimum  amount  

8  

Compound  annual  growth  rate  of  71%  in  capital  commitments  

9  

203

7 26 40

881

129

976

39

350

32

756

3

1 1 1

5

1

11

1 1

1

6

-

2

4

6

8

10

12

0

200

400

600

800

1,000

1,200

Compromisos de capital No. fondos

Funds    by  sector  (USD  3.4  billion)  

79 79

431

982

1,488

2,429

2,708

3,439

2

4 4

3

7

5

7

-

1

2

3

4

5

6

7

8

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2005 2006 2007 2008 2009 2010 2011 2012

Cumulative annual amount No. Funds

Capital  commitments  (USD  3.4  billion)  

10  

81%  of  funds  capital  commitments  is  buyout  oriented  

  In  Colombia  there  is  only  one  venture  capital  

fund  with  COP  40.000  million  

  Infrastructure  funds  represent  26%  of  total  capital  commitments  

  Colombia  has  two  major  challenges:  to  develop  

the  venture  capital  industry  and  to  offer  equity  

resources  for  early-­‐stage  companies  

390 47

3,003

4 2

26

-

5

10

15

20

25

30

35

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Seed Capital Venture Capital Private Equity

Capital commitments No. funds

Funds closed by stage of business development

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  commijee  

External audit Governance  

SecuiriUes  

11  

Private  equity  /  venture  capital  fund  

Business  model  for  PE  fund  under  Colombian  legislaUon  

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  

12  

Ashmore  Investment  Management  Limited  (UK)-­‐  Ashmore  Infraestructure  Colombia  

Darby  Overseas  Investments,  Ltd.,  the  private  equity  arm  of  Franklin  Templeton  Investments  

SEAF    (US  Management  Company)  

Aureos  La9n  America  Managers  –  Aureos  (UK)  

InternaUonal  General  Partners  

Advent  Interna9onal,    global  private  equity  firm  

Southern  Cross  Group,  private  equity  firm  focused  on  La9n  America  

Linzor  Capital,  private  equity  firm  focused  on  La9n  America  

Victoria  South  American  Partners,  private  equity  firm  focused  on  South  America  

HarbourVest  ,  global  private  equity  firm  

Brilla  Capital  Management  (US  Management  Company)  

Brookfield  Asset  Management  Inc  (Canada)  

AEF  Private  Equity  Management  LTD  (Canadian  Management  Company)  

General  Partners  and  InternaUonal  Investors  

Equity  Interna9onal,  private  equity  firm  focused  on  growth  countries  outside  the  U.S.  

HSBC  Capital,  investment  banking  subsidiary  of  HSBC  Bank  

Riverwood  Capital,    private  equity  firm  

General  partners  and  InternaUonal  investors  with  investments  in  Colombia  

Ci9  Venture  Capital  Interna9onal  ,  manager  of  private  equity  funds  focused  on  emerging  market  

Pantheon  Ventures,  global  private  equity  fund  of  funds  

Hamilton  lane  (in  process  of  establishment)  

Partners  Group  (in  process  of  establishment)  

13  

MulUlateral  

Spanish  development  finance  ins9tu9on  

FMO,  entrepreneurial  development  bank  of  the  Netherlands  

Inter-­‐American  Investment  Corpora9on,  member  of  the  Inter-­‐American  Development  Bank  (IDB)  

Corporación  Andina  de  Fomento,  La9n  America  development  bank  

Mul9lateral  Investment  Fund,  a  member  of  Inter-­‐American  Development  Bank  (IDB)  

Interna9onal  Finance  Corpora9on,  a  member  of  the  World  Bank  Group  

UK’s  development  finance  ins9tu9on  

Investment  through  the  Secretary  of  State  for  Interna9onal  Coopera9on  (SECI)  

Norfund,  Norwegian  investment  fund  for  developing  countries  Other  InternaUonal  enUUes  

Main  investors  

The  Swiss  Investment  Fund  for  Emerging  Markets    

Mexican  Chamber  of  Private  Equity  Investment  –  Fund  of  Funds  

14  

15  

Colombian    Pension  funds   Pension  fund,    member  of  Grupo  AVAL  

Pension  fund,  member  of  Grupo  Empresarial  An9oqueño  

Main  Investors  

Pension  fund,  member  of  Grupo  BBVA  

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  acUvely  invesUng  

Seguros  Bolívar,  general  and  life  insurance  company  

Main  Investors  

Colombian  Development  Banks  

Findeter,  development  bank  that  finances  investment  ini9a9ves  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  An9oqueño    

Other  investors  

Argos,  productora  y  comercializadora  de  cemento  y  concreto,  miembro  de  Inverargos,  miembro  del  Grupo  Empresarial  An9oqueño  

Banca  de  inversión,  member  of  Grupo  Bancolombia,  which  is  part  of    Grupo  Empresarial  An9oqueño    

16  

Corporación  Financiera  Colombiana  S.A.,  member  of  Grupo  AVAL  

17  

Pension  funds  looking  to  invest  in  PE  funds  

In   August   2010,   the   obligatory   pension   fund  model  change  to  a  Mul9  fund  model.  

The  investment  limits  of  the  mul9  fund  model    are:  

 Higher  risk  pension  fund:  up  to  7%    

 Moderate  risk  pension  fund:  up  to  5%  

 Conserva9ve  risk  pension  fund:  0%  

Source:  Colombia  Financial  Superintendence  report,  October  2012  

25,372 26,020

39,084

51,672

50,058

62,753

3%

32%

-3%

25%

-5%

5%

15%

25%

35%

45%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2007 2008 2009 2010 2011 Nov-16

Obligatory funds % Growth obligatory

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

18  

Voluntary  pension  funds  looking  to  invest  in  PE  funds  

Voluntary   pension   funds   could   invest   up   to   10%   in  private  equity  funds  in  Colombia  and  abroad  

Source:  Colombia  Financial  Superintendence  report,  july  2012  

2,946 2,869

3,958

5,099

5,161

5,477

-3%

38%

29%

1%

6%

-0.1

-0.05

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0

1,000

2,000

3,000

4,000

5,000

6,000

2007 2008 2009 2010 2011 Aug-16

Voluntary funds % Growth voluntary

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

19  

Insurance  companies  as  new  LPs  

Insurance   Companies   have   an   investment   limit   in  private  equity  of:  

Life  insurance  

 Local  PE  funds  up  to  5%  on  the  value  of  reserves   Foreign  PE  funds  up  to  5%  on  the  value  of  reserves  

General  insurance  

 Local   PE   funds   and   foreign   funds   up   to   5%   on   the  value  of  reserves  

Earthquake  insurance  

 Foreign  PE  funds  up  to  5%  on  the  value  of  reserves  

Source:  Colombia  Financial  Superintendence  report,  march  2012  

647 674 794

908 1,037 1,056

722

1,051

1,282

1,512

1,709

2,521

4%

18%

14% 14%

2%

46%

22%

18%

13%

48%

-2%

8%

18%

28%

38%

48%

58%

68%

-

500

1,000

1,500

2,000

2,500

3,000

2007 2008 2009 2010 2011 Mar-16

General insurance Life insurance

% Growth general insurance % Growth life insurance

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

1.  Bancóldex  

2.  The  private  equity  industry  in  La9n  America  and  Colombia  

3.   Bancoldex  Capital:  Private  Equity  and  Venture  Capital  Investment  Program  

Contents  

20  

21  

AcUvely  invesUng  in  Private  Equity  and  Venture  Capital  funds  

Source:  Bancóldex,  December  2012     Source:  Bancóldex,  December  2012  

Since  2009,  33  funds  have  been  analyzed  by  Bancoldex.    Five  investment  commitments  (USD  46M)  in  mul9  sector  funds,  

tourism,  venture  capital  and  infrastructure  

16

8

4

5

2009 2010 2011 2012

Funds under Preliminary Due Diligence (33)

4

8

3

2009 2010 2011 2012

3

Funds under Due Diligence (18)

22  

Outsourcing  Services,  Informa9on  Technology,  Biotechnology,  Clean  Energy,  Digital  Anima9on,  Tourism,  Power  genera9on  ,  

Logis9cs  are    some  of  the  sectors  backed  by  Bancoldex  investments  in  funds  

  27  companies  have  been  backed,  17  of  them  are  

in  Colombia  

  21%  of  the  capital  have  been  invested  in  service  

companies  

  17%  in  Informa9on  technology  and  

telecommunica9ons  companies  

  Successful  exit  of  a  biotechnology  firm  

(agribusiness)  

Funds’  porfolio  companies  

ITC 75,303

17%

Housing 18,958

4%

Retail 39,975

9%

Tourism 15,510

3%

Services 96,522

21% Oil&Gas Services 50,365

11%

Energy 22,317

5%

Biotechnology 3,684

1%

Dining 27,876

6%

Health 14,550

3%

Port 39,731

9%

Storage 51,800

11%

Highway Concession

750 0%

Fund  investments  by  sector  

Private  equity  funds  /  Venture  capital  funds  (early  stage  and  growth  capital)  

Local  and  interna9onal  funds  that  invest  in  Colombia  at  least  2  9mes  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  interna9onal  PE  funds  ;  Colombian  regula9on  for  local  funds  (Decree  2555  of  2010)    

Experienced  Management  Teams  and  track  record  preferred.  Proper  corporate  governance  structure  

Full  fund  preferred  

Funds  with  risk  diversifica9on  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  distribu9on  

Diversifica9on  

Exclusions  

23  

Broader  investment  strategy  moving  forward  to  VC  funds  and  INNOVATION  

24  

Technical  Assistance  Program  to  build  the  PE/VC  ecosystem  

Fund  Managers  (GPs) Investors  in  funds  (LPs)

Enterprises Ecosystem

-­‐    Suppor9ng  the  crea9on  of  a  PE/VC  Ins9tute  for  La9n  America  

-­‐   Suppor9ng  the  crea9on  of  the  Colombian  PE/VC  Associa9on  -­‐  COLCAPITAL    

-­‐     Encouraging  best  prac9ces  

-­‐  Promo9ng    PE/VC  funds  as  an  asset  class  among  new  poten9al  investors  

-­‐  Promo9ng  best  prac9ces  among  LPs  

-­‐ Implemen9ng  Corporate  Governance  best  prac9ces  

-­‐  Developing  Venture  forums    to  connect  companies  with  PE/VC    funds  

-­‐ Proposing  a  friendly  regulatory  framework  

-­‐ Sponsoring  events  

-­‐ Dissemina9ng  informa9on  (web  portal  ,  and  news  lejers)  

To  promote  the  development  of  the  PE/VC  industry  in  Colombia,  we  concentrate  on  four  pillars:  

www.bancoldex.com  

GRACIAS