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Wednesday, November 13, 2013

Investing in Transportation Infrastructure in Colombia; Why Colombia and Why now?

New York, Point Roberts, WA - November 13, 2013 (www.investorideas.com newswire) Investorideas.com, an investor research portal specializing in investing ideas for global investors, issues an insight into Colombia’s growing economy from The President of the National Infrastructure Agency, Mr. Luis Fernando Andrade. Mr. Andrade was recently a keynote speaker at Proexport Colombia’s event on October 22nd in Toronto where Canadian investors and business leaders had an opportunity to hear about the new infrastructure transformation underway in Colombia.

Canada's foreign direct investment has grown significantly since 2011 and this new infrastructure investment opportunity offers a new portfolio for some of Canada's larger investors. Some of the biggest pension funds were present to ask a series of proactive questions as they looked at investing in transportation infrastructure as a new venture. .
Canadian companies at the presentations included AECON, Anglo Andino Group, BMO Capital Markets, Borealis Infrastructure, Brookfield Infrastructure, Export Quebec, GMP Securities, Scotiabank, Ontario Teachers Pension Funds, with over twenty four in attendance.
Colombia's economy is currently the third largest in Central and South America and the twenty eighth largest in the world and its leaders are now taking aim at meeting the needs of the required infrastructure to accommodate this growth. In 2011 investment in infrastructure represented 1% of GDP. The objective is to reach 3% of GDP by 2014.
Colombia has set an ambitious goal of investment up to USD30 billion within the next 8 to 10 years. In terms of attracting foreign investment, Colombia has bragging rights to ranking sixth in the world and first in Latin America for investor protection, according to the World Bank. Currently the top four foreign investors in Colombia are Chile, Brazil, US and Netherlands.
Mr. Andrade said investment in roads represents one of the biggest opportunities in the new infrastructure plan. The structure for the investments will be Public-Private Partnerships, designed to attract private capital that sees the emerging opportunity in Colombia . They are offering investors a base rate of 13% plus inflation with a 25-30 year term.
"There will be an investment boom in road building" said Mr. Andrade. "There will also be projects in rail, ports and airports but in terms of dollar volumes the biggest amount is going to be in roads ." The goal for roads is 5200 Km of double lane roads.
The investors will be typically be engineering companies, construction companies and pension funds.
The scope of the projects will include design, rehabilitation, construction and/or improvement, operation and maintenance and financing.
Twenty five of the largest foreign developers are participating in a pre-qualification process. Guidelines for the investors include that the company or fund is required to show enough equity on the balance sheet for three times the equity needed for the project. Additionally the investor needs to show experience in Public-Private Partnerships. Other requirements include that the investors have raised debt equivalent to the debt required of the project and that the leverage ratio on the balance sheet be below 85%.
"We don't want companies over indebted during these projects " notes Mr. Andrade.
In closing Mr. Luis Fernando Andrade answered Investorideas.com question "for Canadian and global investors why Colombia and why now ". He told us "money is safe, investors get good returns, there is a long tradition of respecting contracts and we respect the rules of the game. "
About Proexport:
Proexport Colombia is the organization in charge of promoting Colombia as an international tourist destination, attracting foreign investment and fostering non-traditional exports.
Through their national and international office network, they provide support and comprehensive assistance to national entrepreneur, through offering services with the aim of facilitating the design and execution of its internationalization strategy, seeking the generation and tracking of business opportunities. To learn more about Proexport visit www.proexport.com.co
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