Called to Colombia

Why spend time on roadshows in a tricky time for fundraising when you can have a ready-made investment vehicle handed to you? This was a question that a group of five infrastructure fund managers in Latin America found themselves asking when Colombia’s government decided to seek a financial sector partner to manage the Infrastructure Fund of Colombia.

In February, after a public solicitation process, emerging markets-focused investment firm Ashmore Investment Management and Inverlink, a local investment bank, were selected as the fund managers, with Macquarie Capital as their technical adviser. They beat out four other parties for the job.

The fund is being sponsored by the Colombian government in conjunction with two multilaterals: the Inter-American Development Bank (IDB) and the Andean Development Corporation (CAF). It will have initial capital of $500 million and be structured as a private equity fund under Colombian law.

The Colombian government is supplying 25 percent of the fund’s capital, according to IDB’s Colombian public credit director, Bibiana Lara. IDB and CAF will jointly provide an additional 25 percent of the capital, subject to board approval.

Additional investment is being sought from local pension funds and insurance companies. All three members of the Ashmore- Inverlink consortium have also agreed to commit capital to the fund either directly or through their managed entities. The fund’s objective will be to support the development of projects and companies in the transport, energy, water, sanitation, communications and logistics sectors of the Colombian economy. Cash-starved fund managers struggling for commitments can only hope that this is the beginning of a trend for emerging markets to outsource fund management.