Libe rtad y O rde n

PRIVATE EQUITYFUNDS

POTENTIAL GROWTH OF THE PRIVATE EQUITY INDUSTRY

In 2015 Colombia maintained its 4th place position among 12 Latin American and Caribbean nations, in the ranking developed by the Latin American Private Equity & Venture Capital Association (LAVCA), which measures how favorable conditions are for the development of the private equity industry. Sectors like energy, tourism, health,

forestry, agro-industry and ICTs, among others, o�er investment opportunities.

SOURCE: BANCOLDEX – PRIVATE EQUITY FUNDS DEPARTMENT.

industry in Colombia has allowed it to move up in the LAVCA ranking: it was in 7th place in 2006, and it has held 4th place since 2010.

In 2014 Colombia accounted for 1% of the total resources collected in private equity and venture capital funds in Latin America, which in turn accounts for 5% at a global level.

28% of committed capital is in multi-sectoral funds, 27% in real estate funds, 19% in infrastructure funds and 8% in funds for the oil and gas sector.

COMMITTED CAPITAL IN USD MILLIONS, 2005-2014.

According to Bancoldex [Banco de Comercio Exterior (Foreign Trade Bank)], there are 46 fund managers and 61 funds, the number has grown at a compound annual rate of 40.6% and 44,5% between 2005 and 2014.

US$3,2 billion have been invested in 421 companies or projects and more than US$4.200 million in committed capital for investments in the coming years.

2013

34

1.378

34

594

1.905

2.9543.246

3.8724.070

2005 2006 2007 2008 2009 2010 2011 2012

4.399

2014

FAVORABLE ECONOMIC CONDITIONS

Inflation, controlled and under its goal

GDP growth, 2014 Internal investment rate as a percentage

of GDP

Macroeconomic stability and dynamic long-term economic

Inflation is controlled and under its goal. In 2014 in�ationclosed at 3,6%.

Per capita GDP above USD $10,000, almost twice what was recorded for the year 2000.

Internal investment rate close to 30% (as a percentage of GDP).

3,6% 4,6% 30%

performance. �e Colombian economy grew by 4,6 in 2014 and was estimated to grow by 3,0% in 2015.

Estimated population of 48 million in 2014 and a growing middle class that is expected in 2020 is 37% of the population.

�e banking index, measured as the number of adults that have at least one �nancial product, has grown at rates of greater than 6% over the last three years.

Reduction in the unemployment rate. �e average unemploy-ment rate in 2015 was 8,9%.

According to LAVCA, one of Colombia’s strengths is its attractive regulatory framework for the creation and management of private equity funds.

Since 2007, Colombia’s regulations have generated interest among investment funds and have facilitated and boosted the private equity industry. Decree 1242 of 2013 replaces the previous regulations in regard to the administration and management of investment funds.

protection it o�ers investors, ranked 6th in the world and 1st among Latin American countries, according to Doing Business.

In 2012 Bancoldex and the Inter-American Development Bank’s Multilateral Investment Fund (MIF) led the creation of the Asociación Colombiana de Fondos de Capital [Colombian Association of Private Equity Funds] (COLCAPITAL) to strengthen and promote development of the private equity industry.

In 2009 the Bancoldex Capital program was created with the aim of promoting the private equity industry in Colombia.

CONSOLIDATED REGULATORYAND INSTITUTIONAL FRAMEWORK

No restrictions on local institutional investors to invest in private equity, besides there is protection of minority shareholder rights.

investors such as pension funds and insurance companies, which have had an excellent performance in recent years.

Currently there are 4 private pension funds (Protección, Porvenir, Colfondos and Old Mutual) and around 30 insurance companies with the capacity to invest in private equity funds.

�e �nancial and insurance sector is one of the sectors that most contributes to the growthof the economy.

In 2007 changes in the regulations allowed pension funds to invest in private equity funds. In 2011, with the implementation of the multi-fund system, smaller pension funds can invest up to 5% in private equity funds and up to 7% if it is a high-risk fund.

Other important institutional investors are development banks, financial corporations and multilateral investment funds.

exit strategy for private equity funds, with greater diversification for investors and better access to capital markets. Greater market consolidation is expected to be achieved with the entrance of the Mexican Stock Exchange.

Currently, the MILA [Mercado Integrado Latinoamericano (Latin American Integrated Market)] is the top market in Latin America by number of companies listed, second in market capitalization and third for volume of trade.

AVAILABILITY OF LOCAL CAPITAL AND ACCESS TO CAPITAL MARKETS

MULTIPLE INVESTMENT OPPORTUNITIES

Colombia has a diversified economy with investment possibilities

construction sectors stand out in the country.

In Colombia there are investment opportunities in small and medium companies in stages of expansion and consolidation, which are mainly concentrated in the retail, services and industry sectors.

Source: DANE.

According to the Asociación Nacional de Instituciones Financieras [National Association of Financial Institutions] (ANIF), there is potential for investment in these companies due to the availability of labor and contribution towards growth. Along with micro-enterprises, they account for 81% of the workforce and provide an average of 40% of the GDP.

*Calculations made on added value.

SECTORAL DISTRIBUTION OF GDP 2013GDP: USD 232.995 million*

3,8%

1

21,8%7.9%

8.0%

8.1%

12.3% 14.2%

6,8%

FINANCIAL ESTABLISHMENTS AND BUSINESS SERVICES

SOCIAL COMMUNAL AND PERSONAL SERVICES

COMMERCE, REPARATION, RESTAURANTS AND HOTELS

MANUFACTURING INDUSTRY

MINING

TRANSPORTATION AND COMMUNICATIONS

CONSTRUCTION

AGRICULTURE, FARMING, HUNTING, FORESTRY AND FISHING

ELECTRICITY, GAS AND WATER

For private equity funds have been identi�ed investment opportu-nities in the sectors of health, Software and IT, tourism infrastruc-ture, agriculture, energy, infrastructure and innovation projects.

LARGE COMPANIES HAVE CHOSENCOLOMBIA AS A PLACE TO INVEST

FCP, Aureos Latin America Fund I LP and Aureos Latin America Fund II LP, which seek long-term capital appreciation via investment in companies in di�erent sectors.

AUREOS CAPITAL:

Company dedicated to the professional management of real assets and private equity funds. Brookfield’s Colombia Private Equity and Infrastructure Fund is focused on making infrastructure investments in the energy, transportation and public services sectors.

BROOKFIELD:

includes the Brilla Colombia Private Equity Fund, which has resources

is to invest in luxury hotel assets on the Colombian Caribbean Sea.

BRILLA GROUP: