In late 2017, a new investment bank was formed in Colombia. Called PrimeCap S.A.S., the founders launched the new venture in an effort to facilitate more mid-sized projects and funding investments.
Photo: Camilo Cordovez Amador, co-founder and managing partner at PrimeCap, sees a lot of potential in real estate, fintech, and renewable energy. (Photo credit: Loren Moss)
While more capital investment has been coming to Colombia in recent years, this level has been more difficult to find, according to PrimeCap co-founder Camilo Cordovez Amador. He says that massive projects, of the nine-figure variety over $100 million USD, attract whales in New York. And lower-level investments in the hundreds of thousands or up to a few million can also be had from a variety of sources.
But he and his partners are hoping to bring more financing in that Goldilocks zone that he believes will help kick start more projects that help drive an important part of the nation’s economy.
To learn more about PrimeCap, Finance Colombia Executive Editor Loren Moss recently sat down with Cordovez.
Loren Moss: What is PrimeCap?
Camilo Cordovez Amador: PrimeCap started about six months ago, along with my partner Antonio Salazar, and one of the main reasons is because we started to feel there was a need for medium-market investment banks to get more involved in Colombia.
“I see PrimeCap in three years as probably one of the, let’s say, top 20 — at least — investment banking companies in Colombia.” – Camilo Cordovez Amador
At this point there is starting to be more supply of capital in Colombia. There are many private equity funds starting capital funds. Around 10 years ago, you didn’t have any of this in Colombia.
So I think it’s pretty important to be able to get some of the small to medium companies and projects in Colombia to be able to have a professional company that is able to structure and guide them to access capital — not only in Colombia but in international capital markets as well.
Loren Moss: Why now? Why is this the right time for a mid-market investment bank to start in Colombia?
Camilo Cordovez Amador: For around four years, I’ve been working in capital with a New York-headquartered investment bank, and they have a $100 million USD minimum for Colombia. So during this time I have been, let’s say, struggling to find these type of deals. It’s not a target that is easy to find here in Colombia. During this experience, I encountered many projects and entrepreneurs that were seeking something around $20 million USD or $30 million USD.
And my partner, he has been working with the government in, and he has been working with some private equity funds as well here.
Finally, in Colombia, you now have a supply of capital and private equity funds. Investors are starting to get more interested in investing here in Colombia — not only from local money but we also have some international and U.S. funds that are now here in Colombia.
Due to regulation, you now have pension funds as well. Around three years ago, they started to have opportunities in investing directly — not only through financial instruments or bonds but now they are able to invest to private equity funds. This didn’t happen probably four or five years ago.
Loren Moss: Who is your market and what’s your focus? Because there are obviously a lot of companies in the $20 million USD to $50 million USD. Where do you see the market opportunity?
Camilo Cordovez Amador: Looking at the current situation in Colombia, there is plenty of space for real estate deals going on. Of course, you cannot focus only on office space in Bogotá, for example, because it is a little overcrowded. But there are different opportunities that you have in the mid-sized cities of Colombia. Among the investors and private equity funds you have in Colombia, the majority are focused in real estate. So this is an opportunity that you cannot miss — to be able to connect the investors with interesting projects.
“Investors are starting to get more interested in investing here in Colombia — not only from local money but we also have some international and U.S. funds that are now here in Colombia.” – Camilo Cordovez Amador
Another area that we want to focus on is energy. In Colombia there is a high potential for renewable energy. There is still some regulation that needs to take place in terms of pricing. Related to solar energy, you still don’t have a correct government position towards these type of projects, for example, but I’m sure that they are working on this. I have been meeting with the Ministry of Energy, and they are working towards some type of subsidy for these types of developments to take place.
The other sector that we want to focus on is technology. In Colombia, starting about three years ago, you began starting to see some interesting startups in the fintech space. There are a lot of opportunities. Much of the population does not have banking accounts — they are not connected to the financial system — so there are certain spaces where you can make a connection between the population and the banking system.
I think these three industries will be our main focus at least for the next five years to come.
Loren Moss: Are there unique challenges to fundraising in Colombia? Are there unique idiosyncrasies that require Colombian or local market expertise when it comes to investment, banking, M&A, and private equity?
Camilo Cordovez Amador: Colombian culture has been very closed in terms of accepting investors into their companies. I think this is something that has been changing in recent years. This includes people who have wealth here and are starting to realize that they need to have a more professional approach into their management. There are a lot of family offices starting to come up here, and this is something that you probably didn’t have in Colombia five or 10 years ago.
This is something that is still a challenge. Its very different approaching an investor who is an individual who doesn’t actually have the best understanding of analyzing how to invest in two different ventures or how to manage their portfolio.
“In Colombia, starting about three years ago, you began starting to see some interesting startups in the fintech space. There are a lot of opportunities.” – Camilo Cordovez Amador
Now that you have private equity funds, this is starting to change the culture. For the oldest generations in Colombia, it is still a challenge to understand the way they need to approach and address their wealth and investments. But the newer generations are starting to realize this is the way to go. This creates a better environment for investment banks or financial advisors to get involved and to relate with the market and with the capital supplier.
Loren Moss: How is PrimeCap going to look in three years? What is your vision for the company? Where do you and your partner expect to be — where do you want to be — in 2021?
Camilo Cordovez Amador: That’s an interesting question. We started PrimeCap based on the dream of what we want to be a few years from now — and for the rest of our life.
One of the reasons we wanted to have PrimeCap is because, usually when you work at other financial institutions, there is of course a focus on creating profits, right? But, for us, one of the main points is that, when you engage with a project owner, you are taking care of their dreams and aspirations — as well as their investment. This is key: the human part involved in these types of transactions.
So, within three years, we have certain goals related to job creation. We are not only focused on our profits, but we see this as an opportunity to actually get Colombia to a different level and to work on projects that have an impact on Colombia’s economy — and not only economically but socially. We want to be able to create jobs and welfare for the projects that we get involved with.
I see PrimeCap in three years as probably one of the, let’s say, top 20 — at least — investment banking companies in Colombia. I think that we will be able to get enough interest to create a recognized investment banking company in Colombia and be able to connect foreign and international investment companies into Colombia. This is probably a very broad answer, but this is how the way the I am seeing PrimeCap.