Since entering the Colombian market in 2012 with the acquisition of Bolsa y Renta, BTG Pactual (BTG) has had one main objective: to become Colombia’s leading investment bank, just as it is in Brazil, and by offering the same products it offers across Latin America. In order to achieve this, the bank’s investment banking division has focused on advising top-tier clients on transformational transactions – and 2018 was a good year in this respect. Through the execution of several transactions BTG is heading Colombia’s league tables for investment banking performance. Three transactions in particular have defined this success.

First, Grupo de Energia de Bogotá’s $669m offering, on which BTG acted as the lead left bookrunner, was a landmark process in Colombia. This was the first international equity offering from a Colombian issuer since 2014, the largest 144A offering from the Andean region since 2013, and the first 144A equity offering from a Latin American issuer since April 2018. Although all local stockbrokers were invited to place these shares, BTG Pactual generated 62% of total demand for the transaction in which shares were priced at COP2,018 ($0.67), which represented a minimal (1.1%) discount versus the launch price.

BTG also has been active in the healthcare space. The sale of Grupo Empresarial Las Americas to AUNA for $210m represents one of the first investments by an international strategic player in a leading Colombian healthcare provider. The transaction was conducted through a fierce competitive process, which resulted in above-the-industry-average valuation multiples.

Also, in late 2017 BTG advised UnitedHealth Group in the acquisition of the Chilean-based Empresas Banmedica, which includes Clinica del Country, Colmedica and other relevant assets in Colombia. Both of these transactions have been decisive in shaping the healthcare industry’s emerging consolidation trend in Colombia, and have further positioned BTG at the forefront of the healthcare M&A space.

A key regional influence

BTG also had an important role in Colombia’s rapidly expanding infrastructure sector, having successfully advised Construcciones el Condor in what resulted in the first private initiative concession to achieve financial closing in the country (Concesion Ruta al Mar). Concesion Ruta al Mar was financed through a $491m hybrid long-term financing package that included a RegS/144A project bond issuance and three credit facilities by local banks. The financial structure designed by BTG was critical for securing investment grade by international credit rating agencies.

David Felipe Perez, Head of Investment Banking
at BTG Pactual

Moreover, in parallel to financing this project, BTG advised Construcciones el Condor in the sale of a 50% stake of Concesion Ruta al Mar to Infrared Capital Partners for $110m. This project finance was considered the best infrastructure transaction in Latin America.

Trends and analysis

BTG’s advisory platform continues to stand out in Colombia, with a promising outlook driven by an active deal flow across all products: M&A, ECM and project finance. More specifically, BTG expects to see incremental M&A activity in the country over the coming years, as the concerns of most investors regarding the political landscape have been largely mitigated and decision makers feel more confident to take action. Furthermore, current dynamics in specific industries, including power and utilities, healthcare and retail, provide untapped opportunities in terms of local consolidation and regional expansion. They can even act as entry windows for foreign investors who have been attracted to this emerging market.

In the same way, Colombian companies are becoming relevant buyers, as they are actively looking for attractive expansion opportunities across the region. This trend is now leading the conversation towards financing structures and what the appropriate source of funds should be for each specific transaction.
Although the global market trends have not been particularly favourable of emerging markets, BTG has been able to successfully navigate and execute under such tough conditions, as proven with GEB’s re-IPO.

We especially see that the M&A dynamics, as previously mentioned, could be a catalyst for interest in potential new issuers and follow-ons to finance expansion, or to execute privatisation plans through foreign listings.

Similarly, local institutional investors – mainly pension funds – are experiencing concentration in their portfolios, which is also pushing issuers to seek financing options from a diversified pool of potential foreign shareholders. As experienced during GEB’s re-IPO, market conditions must be optimal for this to materialise. The potential pipeline will be highly sensitive to emerging market volatility, which tends to suffer from capital flight, even when the countries are distant in geographical terms.

Further information
www.btgpactual.com