It is a nation which has not only managed to impressively turn its economy around, but also its image – and all within just over a decade. Colombia is looking exceedingly attractive to outsiders these days – for investors and tourists both.
Is Colombia a new emerging power to watch? Certainly it won’t pay to ignore it, warn many financial sources…
Only last month Colombia’s economy was still impressing the International Monetary Fund (IMF) surveillance team during their annual Article IV visit. This was no mean feat considering the scrupulousness of the researchers, headed up by Valerie Cerra.
The country’s “strong policy framework” leading to “macroeconomic stability” was praised as underpinning the country’s record of growth. So too was a policy of tough external resilience. Both have helped Colombia retain its reputation as a strong emerging power.
Having said that, it’s not all plain sailing from here on in. The fall in world oil prices could lead to difficulties for Colombia, the commission admitted. But, they were confident that it would be able to ‘ride the economic storm.’ Indeed, one way the country plans to do so is by tightening up on public spending (the government announced a three per cent cut in February this year).
The IMF’s words are praise indeed considering Europe’s current bad report card. But then Colombia hasn’t exactly done anything to annoy the IMF – quite the opposite in fact. It has put it amongst the leading countries (it boasts the third largest economy after Brazil and Mexico).
Overall in Colombia statistics point to far less poverty, inequality and unemployment. From a financial point of view private investment has soaredand the country’s financial rating with the rest of the world is better than ever. Certainly its central bank is on a sound footing and enjoying the financial comfort of the IMF’s Flexible Credit Line.
Nogal Asesorias Financieras a visionary role
The ongoing stable economic situation is extremely far removed from June 2001 when Bernardo Vargas Gibsone and Miguel Cortes founded Nogal Asesorías Financieras – a Colombian boutique investment bank specialising in Mergers & Acquisitions as well as financial advisory. Their intention at the time of setting up was to help local businesses maximise profits.
However, it soon became clear to the founders that Colombia itself had untapped resources – many of which would undoubtedly appeal to foreign investors. Othersdidn’t share their vision. The country was just coming to terms with a failed peace agreement andthere were increasing problems with political insurgents. The economy wasn’t anything to write home about at the time either.
The optimism surrounding the birth of NogalAsesoriasFinancieras,however paid off. A stronger Colombian economy was indeed just around the corner and years later international investors would be clamoring to get a foot in the door of Colombia’s finance sector (it seemed to international investors to be recession-proof when Europe and America had just gone under). Ten years after Nogal was founded – 2011 – Colombia recorded economic growth of 6.6 per cent. Foreign investment meanwhile had increased ten-fold between 2003 and 2013 to a high of $17bn in 2014.
More international investment for Colombian private companies
Vargas, who brings with him 25 years of experience in international investment banking and corporate finance, said: “Ourassessment proved to be right. The country did indeed transform.
“Fortunately this also coincided with multiple corporations in America, Europe and further afield starting to get itchy feet and looking for new investments abroad. Colombia with its ongoing democracy and continued economic growth started to look incredibly attractive. Come the sub-prime mortgage crisis in the developing world, it proved a haven.”
During this period Nogalhad built itself a considerable reputation as an independent investment bank – both locally and regionally. It became known for its creative financial solutions, sophisticated analysis and transparency – as well as an experienced and technically capable team, ready to compete with the best of its kind. At its heart was a determination to ensure Colombia became a prosperous nation.
“Nogalbecame for many the bank of choice for financing, capital structure advisory, and M&A transactions,” said Vargas. “Today Nogal helps both local and international companies. We do this by implementingcreative and strategic transaction decisions which, ultimately, strengthens their businesses.”
Prior to founding Nogal, Vargas was employed by ING Barings as managing director of the firm’s corporate and investment bank in Colombia. Before that he was founding CEO of Proexport Colombia (the country’s export promotion agency). Other past roles included CEO of Fiducoldex, a local trust bank, and advisor to the then Minister of Foreign Trade, Juan Manuel Santos.
Amongst the international companies the Nogalteam has supported include Coca Cola International, Citibank Venture Capital International, Pacific Rubiales, Pronaca Ecuador, CorpBanca, AAK, France’s Safran Group and its subsidiaryMorpho, and Brazil´s Cemig.
Nogal and its partnership with Global M&A
Nogal are also the exclusive Colombian representative for Global M&A– the world’s largest independent partnership of investment banks. At the time of the merger, several years ago, the chair of Global M&A Michael Gibbons told reporters: “The addition of Nogal to the partnership greatlyenhances our best-of-breed footprint inSouth/CentralAmerica.”
Nogalitself recently scooped the title of Best Investment Banking Boutique Firm Colombia – 2015′ in the recent M&A awards.
Being a partner of Global M&A gives Nogal access to intelligence and assistance from around 40 partners in the world’s largest financial centres – most of which are in developed nations.
But back to Colombia and its future. Population-wise it is the second largest Spanish speaking nation after Mexico. The recent drop in the peso wasn’t exactly greeted with enthusiasm locally but was happily received by foreign investors hoping to enter the Colombian market. One big point of optimism on the horizon however is the improvement in relations between the government and the guerillas. The two groups have made a pact – the former has agreed to stop their air raids and the latter to unilaterally stop all attacks and remove landmines. It’s a start and bodes well for the future. Maybe the country’s tourism sector is right. Its latest slogan for attracting foreign holidaymakers is “the only risk in coming to Colombia, is wanting to stay.” Certainly when it comes to foreign investment in Colombia’s economy the team at Nogal would agree.