Category: Colombia

Colombia has said the concession for Bogotá’s international airport, El Dorado, will not now be awarded until August 28 instead of August 18, as originally planned. The delay is so that Aerocivil, Colombia’s civil aviation authority in charge of the bidding process, can reevaluation documents presented by three bidders that were disqualified in the last bidding round. These are: Corporación América, Siemens together with Colpatria, and Stratis. The winner will be awarded a 20-year concession to run El Dorado and will be expected to invest around $650 million to modernize the country’s largest airport. Earlier this month, Aerocivil extended the bidding process for a concession to operate airports on San Andrés and Providencia islands to allow participating companies, some of which are also bidding for El Dorado, more time to prepare documentation.

Colombia has set a date of October 12 to begin the second phase of its privatization of Granbanco-Bancafé. The bank, the country’s seventh-largest in terms of assets, is expected to bring to the country’s coffers around $450 million and will give the successful buyer around 6% of the country’s banking assets. The government opened up the initial phase of the sale of the bank in July, due to end on September 17, during which the bank’s assets are being offered to the country’s pension funds, unions, cooperatives and other sectors of the so-called “solidarity” public sector. Local firms expected to bid for the government’s last financial asset include Grupo Colpatria, Grupo Bolívar (the mayor shareholder of Davivienda), and Bancolombia. Foreign bidders are likely to include Santander, Citibank and HSBC.

Colombia will today, Monday, open the third round of free trade agreement (FTA) talks with the “northern triangle” Central American nations of El Salvador, Guatemala and Honduras. The talks, being held in Medellín, will continue to discuss topics such as: technical obstacles to free trade, visas, contracts and investment rules. Colombia began to negotiate an FTA with Central America earlier this year after it sealed its agreement with the US. The aim of the treaty is to increase bilateral trade between Colombia and the “northern triangle” countries for the benefit of both sides.

Colombia has added power generator Corporación Eléctrica de la Costa Atlantica (Corelca) and minority stakes in two other generators to its privatization list. The funds raised from the sale of 99% of Barranquilla-based Corelca, slated to be sold at auction next June, will be used to finance infrastructure projects on the Caribbean coast, according to a speech by President Álvaro Uribe earlier in the week. The minority stakes to be sold are in Electrificadora del Quindio (EDEQ), and Central Hidroeléctrica de Caldas (CHEC). Colombia recently announced it is to package shares from the best of the state-run regional electricity companies into a holding company that will be partially privatized next year. President Álvaro Uribe, who was inaugurated for his second term in office on Monday, has pursued a vigorous program of privatization during his time as president.

ONGC Videsh (the overseas investment arm of India’s state-owned Oil and Natural Gas Corp) has said it may bid for a stake in Omimex Colombia, owned by US oil company Omimex Resources. The Indian company is expected to bid together with China’s National Petroleum Corporation (CNPC). In June Omimex announced it would invest a further $70 million in its Colombian operations, looking to diversify from extraction of crude towards natural gas exploration and other alternative sources of energy.

Luxembourg-based Millicom and Caribbean-based Digicel Group are the only two bidders remaining for Colombia Móvil, known as OLA, the country’s third-largest mobile phone company, after Chilean telco Entel withdrew from the race. OLA has again delayed the deadline for deciding a strategic partner, this time until August 31. The company is due to sell 50% plus one share of its capital to an investor in return for an injection of capital. OLA is owned by Colombia’s two largest telcos – Empresa de Telecomunicaciones de Bogotá (ETB) and Empresas Públicas de Medellín (EPM).

Colombia is to package shares from the best of the state-run regional electricity companies into a holding company that will be partially privatized next year. Four of the country’s 12 companies will see the majority of their shares – the 80% stake held by the government – transferred into the new electric power generation holding company, while the remaining 20% of the shares will remain in the hands of their current shareholders. The government has worked hard to turn the public sector electricity companies from loss-making concerns into profitable businesses last year. The shares of infrastructure companies in Colombia is seen as an attractive long-term investment by institutional investors, many of whom already own shares in ISA, the power transmission company partially privatized by the government in 2000 that has gone on to expand in other countries in the region.

Colombia’s largest brokerage, Interbolsa, is to merge with rival firm Inversionistas de Colombia to create an entity the size of a bank, with assets totaling $103 million. Interbolsa, which has a listing on the Colombian Stock Exchange, will absorb Inversionistas, according to the proposals being presented to both sets of shareholders. The two companies say they are looking for synergies within their businesses to consolidate capital. This will enable them to win new business in the area of investment banking and compete with the increasing regional presence of foreign banks, set to increase next year when Colombia’s free trade agreement with the US comes into force. Many analysts see this merger as the first of many in the sector in Colombia.

Álvaro Uribe began his second term as president of Colombia yesterday when he was inaugurated amidst high security in the capital, Bogotá. He vowed to follow through with his election promise of finishing the work he had started in his first term. Uribe, one of the few pro-US leaders in Latin America, enjoys huge popularity in Colombia thanks to his government’s sound economic management of the country and his successful policy of “democratic security”, which has seen a drop in the country’s violence. He won last May’s election with 62% of the vote after a change to the Constitution allowed him to stand for a second term. This is the first time in modern times a Colombian president has served for two consecutive terms.

French supermarket giant Carrefour has said it may be interested in buying Colombia’s retail chain Carulla Vivero, the second-largest in the country. Several weeks ago Carulla Vivero mandated Credit Suisse to search for a strategic partner for it. There has been much speculation in recent months about the possible sale of Carulla Vivero, with possible suitors including Chilean retailers Ripley, Cencosud and Falabella or even US behemoth Wal-Mart. The Colombian retailer, which is controlled by US investment fund Newbridge Andean Partners, last year entered a joint venture with Ripley to launch a co-branded credit card.