A Hub of M&A Activity on Several Fronts

Colombia is an extremely biodiverse country with a very dynamic ecotourism and agricultural sector. However, beyond its great economic capacity and potential in sectors such as coffee, hardwoods, cattle, and fruits, Colombia’s infrastructure and energy sectors are also very dynamic. In recent weeks, both before and after the new President Ivan Duque took office, discussions for major transactions have been ongoing in Colombia’s electricity generation and distribution sector, particularly between public and privately held companies along the country’s Caribbean coastline. Likewise, Mergers and Acquisitions (M&A) have been ongoing in the country’s fossil fuels sector, particularly in the southern Colombian department of Putumayo, as well as natural gas project distribution companies in the Colombian departments of Huila, Cauca, and Putumayo. This positive economic dynamism and increase in M&A activity has led Colombia’s National Development Bank and President Ivan Duque to seriously discuss the creation of the bank’s very own private equity fund.

Strong Fundamentals

Colombia is mid-sized country located along the northern edge of South America. With a total territory of 1.138 million square kilometers, Colombia is almost twice the size of Texas. Geographically, the country is vastly diverse, featuring Amazon rainforest, the Andes mountain range, coastal plains, and inland savannahs. Likewise, there are a variety of temperate climates from a warm Caribbean coastland to cold mountain tops. Currently, Colombia has a total population of approximately 47.7 million citizens, about 81% of which live in an urban setting, notably the capital city of Bogota with some 11 million inhabitants. Currently, Colombia’s national annual gross domestic product (GDP) is US$714 billion and the country has experienced positive economic growth upwards of 1.8% in recent years. The Colombian economy is divided into 8% agriculture, 31% manufacturing, and 61% services. Similarly, the agriculture industry utilizes about 38% of the national territory, while another 54% is forested.

Capitalizing on Resources, Industries & Agriculture

In terms of natural resources, Colombia has petroleum, natural gas, coal, iron ore, nickel, gold, copper, emeralds, and hydropower. Within manufacturing, the national industry is focused on textiles, food processing, oil, clothing, footwear, beverages, chemicals, and cement. Meanwhile, the country’s agricultural industry has as main products coffee, cut flowers, bananas, rice, tobacco, corn, sugarcane, cocoa beans, oilseed, vegetables, shrimp, and hardwoods, such as teak. It is precisely from this diversity of natural resources, agricultural products, and industrial development that Farmfolio is seeking to capitalize by integrating the supply chains that go from a teak forest to a hardwood floor or from a coconut palm tree to a coconut water bottle.

In terms of trade, during 2016, Colombia imported US$43.2 billion worth of goods and exported US$32.9 billion, resulting in a trade deficit of US$10.3 billion. Furthermore, that same year, the country’s main export, representing 25% or US$8.3 billion of the country’s total, was crude petroleum. On the other hand, the country’s main import, representing 7.7% or US$3.3 billion of all international purchases, was refined petroleum. Meanwhile, Colombia’s main trading partners are the United States, China, the European Union, and Mexico.

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