Asset-hungry Colombian firms will continue to snap up opportunities across Latin America in what is seen as a new wave of expansion by companies in the Andean nation, analysts said on Friday.
Colombian enterprises are banking on ample liquidity thanks to the central bank’s expansionary monetary policy at the same time that foreign companies are making more assets available due to the global financial, experts say.
In the biggest foreign acquisition ever by a Colombian company, Grupo Aval said on Thursday it would buy the banking group BAC-Credomatic, controlled by U.S. conglomerate General Electric Co, for $1.9 billion.
“Latin America is a region of the world that has not been so affected by the crisis and having been isolating from those markets has allowed us to have a solid position,” said Andres Ortiz, head of Global Securities, an equities trading firm.
After eight years of strong private sector growth, investors have cheered the rise of Juan Manuel Santos, a former finance minister, to the presidency on Aug. 7, expecting him to build on the pro-market policies of President Alvaro Uribe.
That growth has been supported by an expansionary monetary policy by the central bank since 2008 to combat a fall in demand due to the world economic downturn.
Experts say that Colombian firms are seeking to invest in little-explored markets.
“This opportunity in Central America came to us, it fell like a ring on our finger,” said Colombian magnate Luis Carlos Sarmiento, president of Grupo Aval — a bank conglomerate with assets of $31 billion that bought BAC-Credomatic.
Central America has been a favorite spot for Colombian firms in the last few years. Bancolombia acquired El Salvador’s Banagricola for $900 million, and Avianca airline linked up with TACA air from El Salvador.
Sarmiento said Peru was very attractive for its economic stability while operations in Chile and Brazil needed high levels of capital and had relatively low returns.
Colombia’s state-owned Ecopetrol has invested around $2 billion to buy Hocol, half of Petrotech in Peru and various exploration blocks in the Gulf of Mexico and Brazil.
The country’s gas distributor in the Atlantic Coast, Promigas, recently announced its entry into Jamaica.
“These business are consolidating the image of Colombia as not only a service and products exporter but also as a country with strong businesses that today let us compete internationally,” said Ortiz of Global Securities. (Jack Kimball / Reuters)