![]() The results for financial investors in Colombia have been mixed, with only a handful of fund managers receiving carried interest. This was driven by strong economic growth in that year, attractive valuations, and the desire of dealmakers to anticipate the completion of deals before the tax reform came into effect in 2023. In 2022 the number of deals by financial investors recovered to pre-pandemic levels. In the process, the Colombian M&A ecosystem (fund managers, law firms, investment banks and other advisors) has become more professional, technical and sophisticated. PE investors have acquired hundreds of family-owned, informally managed companies, with limited access to financing, and have provided capital and instilled best management and governance practices, unlocking their growth potential. PE has had a profound influence on the Colombian M&A market. These ranged from gaps in the rules governing fiduciary duties and conflicts of interests of managers and directors of listed companies, to regulatory requirements that frustrate competing tender offers, to the lack of rules regarding the pricing of follow-on tender offers. Gilinski's tender offers highlighted the weakness of Colombian securities regulation in several dimensions. These were very visible given the significance of the targets (two of the most traditional Colombian companies), the prominence of the target's controlling shareholders (members of GEA, the largest conglomerate in the country) and the aggressiveness of the acquirer (Jaime Gilinski, a banker who rose to fame in the 1990s through risky and innovative acquisitions of Colombian banks). The Gilinski group's multiple, non-solicited tender offers for Grupo Nutresa and Grupo Sura also made headlines. ![]() This entailed negotiating with hundreds of minority shareholders so that ultimately 100% joined the deal, making it eligible for completion outside the stock exchange, without having to launch a public tender offer. It was necessary to protect the deal from the risk of other suitors who may launch competing tender offers. In 2022, Akzo Nobel acquired 100% of Grupo Orbis, a listed company, and a leader in the production and sale of paints and coatings in several countries in Latin America and the Caribbean. ![]() However, such deals oftentimes must be completed through public tender offers so they must also set out the mechanics of these offers, as well as protection measures against interlopers and competitors. These usually include the standard concepts of a private M&A transaction, such as representations and warranties (R&W), indemnity provisions and closing conditions. Unsolicited tender offers to acquire control of listed companies are the exception, and listed companies are still largely acquired pursuant to negotiated deals. However, transactions involving listed companies tend to be larger and more visible than even the largest private deals. M&A activity in Colombia is dominated by private transactions, as only a handful of deals involve listed companies. Many financial investors, who are most affected by short and medium-term uncertainty, are in a wait-and-see attitude. And second, the uncertainty generated by the reforms announced by the new president, Gustavo Petro, in key aspects of the economy such as taxation, energy transition, the regulation of household utility bills, pensions and healthcare.Įxisting deal activity is being driven mostly by long-term strategic investors, persuaded by factors such as the country's track record of economic and institutional stability and resilience, the size of its economy and its demographics. ![]() First, the significant headwinds faced by the Colombian economy: a slowdown in growth, dual deficits, soaring inflation and high interest rates. M&A activity is off to slow start in 2023, for two main reasons.
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