Colombia Discusses Ecopetrol Sale

Colombia’s finance ministry has announced it could gradually sell up to 10% of Ecopetrol in 2011 to finance the construction of highways, on which it intends to invest more than COP10trn ($5.2bn), by 2021. A 10% stake in Ecopetrol is worth about $5.7bn based on the September 24 closing price of COP2,670 per share. Ecopetrol says the government, which holds an 89% stake in the oil company, has not contacted its board regarding the possible sale of the stake. Mauricio Restrepo, an analyst at Medellin-based equity research shop Bolsa y Renta, says it is hard to tell what effect such a sale would have on Ecopetrol’s shares as the sale will take place more than a year from now. If the sale were to take place now, he believes it would be hard for the government to sell the shares, as he believes they are overvalued. He has a year-end target price of COP2,250 and a hold rating on Ecopetrol.