In this exclusive interview, Loren Moss, Executive Editor of Finance Colombia, speaks with Cristina Zambrano Restrepo, the Executive Director of ACI Medellín. They discuss how the city nearly tripled its investment attraction over the past year, reaching over $400 million USD, and the strategies used to reassure international investors during a complex electoral landscape in Colombia.

Finance Colombia: I’m here with Cristina Zambrano Restrepo, the Executive Director of ACI Medellín. It’s always a pleasure to be with you. Thank you for the invitation. I know you’re extremely busy, so thank you for making the time to speak with Finance Colombia. How have you been?

Cristina Zambrano Restrepo: Very well, thank you very much. Truly happy to be here with you. Thank you for accepting this invitation. Without a doubt, we work to bring good and positive news to this city, and thank you for being here and for sharing and conveying all of these good things.

Finance Colombia: Yes, today you talked about the successes that ACI Medellín and the city have had this year in attracting investment. Tell us a bit about some of those successes. I think it’s going to be another large business hotel, and tell us a little about how you’ve kept busy.

Cristina Zambrano Restrepo: Of course. A major focus for us is job creation through investment attraction. So, what did we achieve this year? We went from USD 150 million generated last year to more than USD 400 million this year. As I’ve mentioned, this is reflected in the creation of more than 11,500 formal, high-quality jobs generated by this investment attraction. We have major allies and players here, such as Renault-Sofasa, Rivana Business Park, SoftServe, and POMA. A great deal of companies, some already established, others newly arriving in the region. TaskUs too, which is also extremely important and has made major commitments to us. These are the companies that manage to generate that employment.

Finance Colombia: Excellent, that’s fascinating. I have a history with Colombia of about 20 years, and here in Medellín of about 11 years, and it’s truly wonderful to see how the city has grown—not only in population, but in investment and innovation. However, we’re living in a time of high uncertainty around the world—not just in Colombia, not just in the United States, but globally. Especially when we talk about the sector, not in general terms, but politically and economically. Has this made attracting investment more difficult or more challenging over the past year? How has this affected efforts to attract FDI, like, foreign investment, and what strategies have you used to overcome this challenge?

Cristina Zambrano Restrepo: Here, clearly, the political landscape affects and directly impacts confidence, right? The stability of a region, how we present ourselves to the world and to those very large capital investments, showing that we are a stable region, that we believe in them, and that we will support them. So, what strategies do we have? Without a doubt, it has been very challenging. We would like, for example, to be able to offer a range of benefits, extensions, fast-track processes in permitting and such, but in that sense we depend heavily on the national government. But we don’t stop there. We work from the regional level and have a firm commitment locally, focusing on what we ourselves can support, contribute, and manage from this area, the private sector. Which also helped sustain the region during the previous administration, and the academic sector, all the universities, and that ecosystem, which have been fundamental. And now the public sector as well, we are all working together specifically from this region to demonstrate that we are a region that inspires confidence, offers stability, and has all the right conditions for investment to continue to arrive.

Finance Colombia: One thing you’ve mentioned that’s very important, and something Medellín is known for, is the collaboration between the private and public sectors. In many other places, without naming names, it’s an endless war. But in Medellín it has always felt like it’s everybody. That’s why Medellín has always had the Metro and continues to have major projects here, because the private sector has a strong sense of civic ownership. People talk about the GEA, but from a foreign perspective, what I’ve seen is that companies like Grupo Argos, SURA, Bancolombia, and more recently Nutresa, and many smaller ones that aren’t international names, have a sense of belonging and work hand in hand with the government. Speaking of that, for example, Mayor Federico Gutiérrez has traveled to the United States and other places to maintain those good relationships, despite what may be happening in Bogotá or at the Casa de Nariño. What is the importance of the efforts made by the metropolitan government and the city government of Medellín, not only at the ACI level, but also at the level of Alpujarra? How important is this in maintaining a long-term course so that foreign investors continue to see Medellín as a destination, no matter how much may be happening 400 kilometers away?

“We went from USD 150 million generated last year to more than USD 400 million this year… reflected in the creation of more than 11,500 formal, high-quality jobs.” — Cristina Zambrano Restrepo

Cristina Zambrano Restrepo: I think what you’re pointing out is fundamental, and it’s specifically how we’ve achieved this model in Medellín. In a way, when we go out into the world and explain how we work hand in hand, as you said, there are cities and countries that react like, “Why do we need to sit at the same table? I’m very clear about my purpose, and you’re very clear about yours.” Here, the real history of what this city lived through 40 years ago made all of us sit at the same table, and we realized that the efforts of the three actors are always aligned toward the same goals. What always matters to us is citizens’ well-being, quality of life, economic and social development, many things. So when we were going through our hardest moments, we managed to set aside egos, agendas, and competing visions. We sat down, we talked, and we’ve continued to work under that model ever since.

As for what’s happening and what lies ahead in the future: clearly, having a political leader like Federico Gutiérrez, with those strategies and international connections, matters greatly. Countries trust leaders who have demonstrated stability and very clear commitments throughout their governing trajectory, and that’s what our mayor has done. Because of that, they continue to seek us out as a region and want to work with us as a region. As we were just discussing, the investment world is very accustomed to government cycles, more than people might think. They know how to manage political and public-sector issues and how to make bold bets at certain moments. We work on this, and together with the mayor we focus on those countries where we need them to keep believing in us and trusting us. The United States is Colombia’s partner par excellence, that is not going to change. It is the largest market in the world. So the mayor’s strategy of being very close to that government, of working with a binational chamber like AmCham Colombia, which always helps us continue attracting investment and fostering exchanges, is exactly how we work hand in hand.

Finance Colombia: Well, you’ve been very generous with your time. Just two more questions. One is that in the United States, we have a saying: “Nothing happens before the elections.” That big companies are always waiting to see what’s going to happen, what’s going to unfold. Is it the same here in Colombia? I know in Colombia, even more than in the U.S., there’s a law—well, speaking of public contracting, where nothing can really happen. But aside from that, not talking about selling food to a school or something like that—do investors or multinational companies see this as a challenge? Are they ready to sign contracts, or are they waiting to see what happens?

Cristina Zambrano Restrepo: Of course, without a doubt it’s a challenge. And it’s not a minor one. It’s a challenge that forces us to work even harder to demonstrate, from the regional level, just how stable we can continue to be so that investment keeps coming. There are many companies that make their decisions regardless of the electoral period we’re in, largely because, as I mentioned, they know how to manage political risk. But there are certainly many others that are on pause, waiting to see what happens in the upcoming elections. So yes, in that sense, it does present significant challenges. Even so, we are still projecting USD 400 million for next year despite the elections, and we continue to work toward and commit to that goal. And regarding what you mentioned about contracting, specifically public-sector contracting; a city cannot come to a halt just because there is a law on guarantees, right? All of that is already anticipated. Contracts need to be signed and put in motion ahead of time. Everyone here knows how to operate during a six-month guarantees-law period, so everything has to keep moving and functioning.

Finance Colombia: The last question, I’ve known ACI, even from before I was living in Colombia. I’ve now been in Colombia for 12 years, and I’ve known Juan since I was living in Miami. They were always calling me, saying, “Look, come see what we have in Medellín. Come, let us show you something beautiful we have, or an investment opportunity here.” And that was truly a big part of why, when I was living in Bogotá, I decided to move to Medellín. It was exactly like that, maybe not as a major investor, but that attitude, that paisa pride.

Cristina Zambrano Restrepo: Paisa pride, yes, I was just going to say.

Finance Colombia: Exactly, exactly. Like my wife, who’s paisa, when we’re abroad and someone asks her, “Are you Colombian?” she says, “I’m paisa.”

Cristina Zambrano Restrepo: More than Colombian, I’m paisa.

Finance Colombia: What is the “secret hogao” of ACI Medellín? Because regardless of the government in power, regardless of what happens under your leadership, and even looking at the long term, what is the secret sauce behind the success ACI has had as an investment promotion agency? You have a strong global reputation in the FDI space, Foreign Direct Investment. You, as director, as someone who knows how the internal plumbing works, what is the key to the success ACI has achieved?

Cristina Zambrano Restrepo: Well, I think without a doubt it’s our long-term planning. It’s a vision we have for the city, a vision for the territory—a clearly defined commitment. Every time we come in, there’s no need to reinvent things; we need to keep working on what already works. We have a technical team, and this is something I really want to highlight: this is a highly technical organization. While it does, of course, depend on electoral and government cycles, it has a well-trained staff that has been working in these areas for many years, and thanks to them we’ve been able to maintain the stability this institution has. So I would emphasize that, in addition to what you mentioned about paisa pride—which is an identity that characterizes all of us from Medellín. We truly like to see our city doing well; we fight for it, we defend it, we work for it. That paisa pride ensures that everyone who passes through this institution clearly understands the vision and works toward it, regardless of how long they remain here.

Finance Colombia: Yes, it’s true—you have a world-class team, so I know they make your job much easier. Thank you very much for your time; it’s always an honor to see you and to speak with you, and know you can always count on Finance Colombia for anything.

Cristina Zambrano Restrepo: Thank you as well, truly, for being here and for always supporting ACI Medellín. Indeed, you and Finance Colombia have been great partners for us in continuing to share and convey all the news that’s happening.

Finance Colombia: We will, thank you.

Htwenty Capital is one of those early stage venture firms. During a recent event organized by the City of Medellín’s investment promotion agency, ACI Medellín, Loren Moss, executive editor of Finance Colombia and Cognitive Business News was able to spend some time with the investment fund’s Platform Lead, Jimena Cortés to discuss the unique challenges—and opportunities that Colombia presents when it comes to funding and growing high potential startups.

Finance Colombia: I’m here with Jimena Cortés, who works with HTwenty Capital. What’s your role with HTwenty Capital?

Jimena Cortés: Sure, thank you very much for the invitation. I’m an investor for Spanish-speaking LATAM in HTwenty, and I also lead the platform efforts, that is, all the efforts we do post-investment for the portfolio.

Finance Colombia: Great, so HTwenty, my understanding is that it’s an early stage –it focuses on early stage seed, pre-seed, maybe Series A investments, really gets in early in the game. And then, you know, I did a little bit of homework, and you guys specialize in working closely, actively, with investors. Kind of holding their hand, serving a little bit more, you know, almost along the incubator route. Is that correct?

Jimena Cortés: Yes, in part, we’re an active fund, we’re super hands-on with our portfolio. A big, important part of our investment thesis is how we can generate value for our portfolio. That’s correct, we also enter in super early stages, it includes pre-seed also; pre-seed, seed, and pre-Series A is our sweet spot. And yeah, we have a really important network of advisors, super specialized in product, or on B2B acquisition, or technology. And we also have a playbook of partnerships and different stakeholders to help our portfolio, but we also strategically work along with them super closely.

Finance Colombia: Now, one interesting thing I noticed is that you guys have offices here in Colombia, in Mexico City, and Miami. You guys chose that geography as opposed to, let’s say, the traditional Silicon Valley or Boston or New York. Why?

Jimena Cortés: Yes, I think there are two answers to that question. The first one is that our thesis is a cross-border thesis, so we are super focused on creating this cross-border network, so companies from Colombia, Argentina, and Mexico can go to find operations in the US, but also from Colombia and Argentina to Mexico. So that’s an important part. And second, the ecosystem in Miami it’s growing in a really interesting way; it’s not the traditional Silicon Valley ecosystem, but we have a lot of second-time or third-time founders creating companies in Miami. So the ecosystem is getting pretty interesting, so we are making a bet on the Miami ecosystem.

“We invest in early stages. So basically, our sweet spot is pre-seed, seed, and pre-Series A.” – Jimena Cortés

Finance Colombia: Great. So speaking of here in Colombia, you’re Colombian, right?

Jimena Cortés: Yes, I’m Colombian.

Finance Colombia: So this has to be, you know, a point of personal pride that international venture capital firms are taking notice. What are the unique challenges compared to other Latin American locations like Mexico or Brazil? What are the unique challenges that Colombia faces when it comes to attracting venture capital?

Jimena Cortés: Yes, I think Colombia has done a pretty good job because we have a really good talent, technical talent, that is aiming to build interesting things. I think what’s more challenging is the exit ecosystem. Colombia has a small public or IPO system, so we have to look for other types of exits that are more in the private sector, and that’s how we attract these exits. Like in the US, there is a huge market on the M&A side. So I think the challenge here in Colombia is how we are going to exit to make the returns we expect, and how we also get into reasonable valuations.

Finance Colombia: Good point. I think that when we look at, for example, Colombian-listed companies, they tend to list –You know, I remember Tecnoglass, for example, a Colombian company. Now they’re based in Miami. They went from BVC in Bogotá to NASDAQ, then from NASDAQ to the New York Stock Exchange. When we look at the multilatinos, like here in Medellín, we have Grupo SURA, Bancolombia, Ecopetrol, and they’re all listed on the New York Stock Exchange. A lot of them also list in the BVC, maybe more for patriotism, I think, than anything else. So, because of that, it kind of precludes, to a large degree, going to a traditional domestic IPO because the capital markets or the demand for the securities aren’t there. Have you seen any companies, aside from obvious ones like, let’s say, Rappi, have you seen companies that have done international IPOs, that maybe it might be a company with Colombian roots, or other companies in your portfolio, Mexico, or elsewhere, that have gone the IPO route? Or is it more of, let’s look and get a strategic acquisition or private equity, or some other type of exit?

Jimena Cortés: Yeah. In this instance, we have not yet had any company that has made an IPO, either on their local market or in the US. We are looking more for private, targeted acquisitions strategically.

Finance Colombia: Now, looking at it from the entrepreneur standpoint, what type of venture, what type of founder, what type of entrepreneur should consider approaching HTwenty, and at what stage in their project?

Jimena Cortés : Sure. I think in early-stage VC, the founder and the founding team are the most important thing. So we focus on founding and building long-term relationships with these founders. We look for founders who are super technical, who have a lot of experience in the segment of the market they are approaching; we also value a lot the networking they can generate on the problem they are solving, and the obsession and passion for that particular problem, so they want to solve it. That passion that they feel about it.

We invest in early stages. So basically, our sweet spot is pre-seed, seed, and pre-Series A. We normally make tickets between 500,000 and 1.2 million. That’s our strategy. We look for equity ownership between 8% to 12% in these companies to build our long-term equity ownership for the ramp-up and the exits.

We have three main sectors we like to invest in. The first one is FinTech infrastructure. In LATAM, we have been focusing a lot on FinTech infrastructure because we see there’s a lot of gap in the technological infrastructure we have. For example, we invest in acquiring processing, in cross-border payments, in remittances, in collections, and public services. So we are going deeper into the infrastructure on the FinTech side. We think that through this infrastructure, with technology in this infrastructure, we can permeate the technological ecosystem in the region.

Second, we invest in verticalized SaaS, super focused on a particular value generation, like we have in restaurants, we have in inventory management, and other types of SaaS.

And AI. I think AI, of course, is a trending topic, but we are trying to understand how AI works as a backbone in the products and operations of our companies to make it more efficient and more productive. So with 30 people, you can do what you did three years ago, five years ago, you did with a hundred people.

Finance Colombia: Absolutely. And, you know, you’ve been generous with your time. It’s starting to get hot, the sun’s coming up here, I see that. I don’t want us to melt. But you know, I was looking at your website… You guys have some success stories that you’re pretty proud of that are still, of course, in the developmental stages. You mentioned the restaurant company that has restaurant SaaS software. Just mention maybe two or three of the companies that you guys have in your portfolio that are doing interesting things.

Jimena Cortés: Sure. For example, we have Felix Pago. That is a company that has recently closed its Series B with QED as a lead investor. So they have been doing really interesting things, growing at a really interesting pace. So we’re super excited about Felix Pago. We have also, from the Colombian side, Supra, which is working on cross-border payments and was the first investment made by Citibank New York here in LATAM. And we also have Akua, who is a founder from Medellín. They are building really interesting things in acquiring processing, and they closed the biggest pre-seed round in the region. So we’re excited about all the companies.

Finance Colombia: Congratulations. Much continued success, not just for you guys at HTwenty, but obviously for the Colombian entrepreneurial ecosystem. And what’s your website?

Jimena Cortés: Our website is www.htwenty.vc.

Finance Colombia: Thanks so much.

Jimena Cortés: Thank you.

Key Rating Factors

The ‘Excellent(col)’ rating reflects Fidusura’s competitive, operational, and managerial strengths as part of the Sura Investments platform. This affiliation provides an investment process bolstered by comprehensive research across available assets. The rating also considers the extensive experience and balanced profiles of key personnel in risk and investment areas, alongside a robust control and governance structure that reinforces fiduciary responsibility. Additionally, the rating benefits from the group’s financial support.

Fitch identifies ongoing challenges, including the consolidation of the organizational structure to meet business needs, formalizing performance attribution exercises for traditional asset FICs within committees, enhancing documentation of role characterizations and instructions, and increasing automation in traditional asset workflows, particularly in registration, completion, and compliance processes.

The ‘Excellent(col)’ rating is based on the following category scores:

• Investment Process: ‘Excellent’
• Investment Resources: ‘Excellent’
• Risk Management: ‘Excellent’
• Company and Client Service: ‘Strong’
• Investment Performance: ‘Consistent’

Investment Process

Fidusura’s investment process is integrated into the Sura Investments platform, benefiting from detailed research and quantitative modeling that incorporates reference portfolios to guide investment decisions for certain traditional asset portfolios. The process follows a clear investment philosophy, grounded in internal tools and analysis. Challenges include communicating portfolio performance metrics in formal settings and defining minimum investment limits for alternative asset portfolios.

Investment Resources

Fidusura’s teams are part of Sura Investments’ regional structure and staffed with notable professionals. The fiduciary’s structure is undergoing consolidation, with role changes in the traditional asset investment area. Opportunities for improvement include segregating strategy and execution functions for these portfolios and increasing automation in traditional asset workflows. Alternative funds benefit from the Finansoft platform, enabling effective operations, flexibility, and scalability. Sura Investments provides strong technological support.

Risk Management

Fitch observes a robust control and governance structure within Grupo Sura‘s policies, strengthening the risk control framework. The process maintains independence from asset management functions, ensuring strong influence and balance in front-office activities. Fidusura demonstrates solid management of financial and non-financial risks, notably in credit and counterparty risk management, and has made improvements in operational risk management. The fiduciary has a comprehensive compliance framework with clearly documented policies on conflict of interest management, personal investments, and fair allocation of operations.

Company and Client Service

The fiduciary benefits from deep synergies with Sura Investments across all asset management areas and evident financial backing. These competitive advantages have facilitated business expansion and significant growth in assets under management. Fidusura aligns closely with investor interests by incorporating portfolio performance into variable compensation determinations. The fiduciary maintains a strong client service infrastructure and is working on offering transactional options.

Investment Performance

Overall, strategy performance is considered consistent and in line with peer funds.

Rating Sensitivities

Factors that could lead to a negative rating action include:

• Personnel changes affect turnover and retention metrics.
• Adverse significant changes in any of the five key rating pillars.

Factors that could lead to a positive rating action:

• Fidusura’s rating is at the highest level. However, factors that could provide greater stability include those mentioned in the key rating factors.

This rating was solicited and assigned or maintained at the request of the fund operator or a related third party. Fitch Ratings’ credit rating constitutes a professional opinion and does not constitute a recommendation to buy, sell, or hold any security, nor does it guarantee fulfillment of the rated entity’s obligations.

Photo credit: Grupo Sura.

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Collective Mining keeps finding gold

First, some good news. Collective Mining (TSX: CNL, OTCQX: CNLMF, FSE: GG1), which is developing a gold mine down in the Caldas region in coffee country has five drill rigs operating at its Guayabales project, part of its 40 thousand meter drill program for this year. They are getting really encouraging results. This is the same team that developed Continental Gold and sold it to Zijin mining a few years ago for over a billion dollars. We published a more detailed update in Finance Colombia if you want to go over the numbers and assay results of this most recent update. I’m long on Continental because I believe in the team led by Ari Sussman.

Collective Mining Expands its Box Target Area with New High-Grade Samples; Drilling Continues

Petro threatens the private sector with “forced investments!”

President Gustavo Petro is once again terrifying investors, this time with an announcement that he plans to force private banks to loan money to projects and borrowers of his choosing. He said, and I translate:

 “I promised that we were going to present the measures to the congress of the republic to reactivate the economy which will consist, and I say it once and for all, in projects of law that generate FORCED INVESTMENT in the private financial system of Colombia destined to small, medium and large industry of agriculture and tourism in Colombia to reactivate the country.”

This is what Petro’s opponents warned about, and at least when it comes to intent, they were right. The question now is whether Colombia’s institutionalism can withstand more of his adventures. Statements and plans like this destroy investor confidence and scare away capital, just like what is happening with Ecopetrol.

“…and I say it once and for all, in projects of law that generate FORCED INVESTMENT in the private financial system of Colombia” – President Gustavo Petro

General Motors To Close Colombia Manufacturing Operations

Speaking of scaring away capital, General Motors is closing its Colmotores car factory after almost 70 years in Colombia. Now two years ago, GM said it was going to invest 50 million dollars to upgrade the factory to produce new models! What has changed? By the way, the Minister of Labor has told GM that they have to keep the workers employed even though the factory is closing, so we will see how that works out.

Alvaro Uribe is formally charged with witness tampering & bribery

Former President Alvaro Uribe, who in recent years has seen his once stellar legacy tarnished by a litany of revelations, is now formally charged with witness tampering in a drama that goes back to 2012. See the AP article here. https://apnews.com/article/colombia-alvaro-uribe-charges-witness-tampering-bd11a922142d000db1fcac178a1a147e

See also: Declassified US State Department Cables: “Uribe Almost Certainly Had Dealings With The Paramilitaries”

Bilateral harmony between Colombia & US leads to results

In some good news Colombia hosted a US State Department delegation last month for high level talks which led to several announcements. Foreign Minister Luis Gilberto Murillo, who actually was a US Citizen for a while, has announced that Colombians can now access almost 20 thousand United States non-agricultural work visas, and more than 1,000 summer job visas. We will do a write up on this both on Finance Colombia and Empleobilingue, the only source on the web for bilingual talent.

Colombia is going to open five new consulates in Phoenix, Dallas, Denver, Charlotte and Seattle. There are already 9 thousand Colombians studying in the US on Student Visas, and there is a family unification program already in effect between the two countries which has 6,000 current authorizations by the State Department.

The mammoth UNGRD scandal that threatens Petro

There is an ongoing scandal in the Petro Administration where the government paid the equivalent of $12 million US dollars for a fleet of water tanker trucks to supply water to citizens of La Guajira, the desert region on the Atlantic Coast near the Venezuelan border. Now, no water got to the residents of La Guajira, the trucks sat idle on a Colombian military base. But the money paid to a contractor by Colombia’s UNGRD (National Unit of Disaster Risk Management) was “allegedly” used to bribe Senate President Iván Name and Andrés Calle in the house of representatives to unblock opposition to Petro’s reform bills. According to Colombia’s comptroller, the Controller General (Contraloria), each tanker truck was purchased from the dealer, Kenworth de la Montaña, in Medellín, for about 600 million pesos, but then sold to the government for $1.2 billion pesos. This way they could launder money out for political purposes.

Former Deputy Director of the UNGRD, Sneyder Pinilla “prendió el ventilador-started the fan” (Colombian saying, like “when the shit hits the fan”) and accused former director of the UNGRD, Olmedo Lopez of using the UNGRD money through this conspiracy to pay the bribes, covering it up with this tanker truck contract, and that the payments were made at the direction of Petro’s Minister of the Interior, Luís Fernando Velasco, and the Councilor for the Regions, Sandra Ortiz, who was actually the bag man, or “bag woman.”

Now Olmedo López and Sneyder Pinilla are testifying and want immunity with Colombia’s attorney general, because they say that the tanker scandal is just the tip of the iceberg in a case that for Colombia, may be larger than the Odebrecht scandal.

According to these two, a political machine was put in place inside the Petro administration that would launder 380 billion pesos, or almost $100 million US dollars of “marmalade” or UNGRD funds into the hands of legislators and bureaucrats to bribe for passage of Petro’s reforms, all of which have failed so far, and to finance last October’s local elections, where again, Petro’s party and allies lost badly. Lopez says the tanker truck scandal just got discovered but according to him there is a whole infrastructure inside Petro’s government operating with this modality to bribe legislators and fund campaigns.

Now the scary thing is that the company that sold the trucks, Impoamericana Roger SAS was sold to Elmer Celis in 2019, and right before the contract for the tankers was being finalized, Celis was assassinated. So this scandal now has deadly implications.

Sura wants out of the EPS health system

Grupo Sura, the insurance and asset management giant has told the Colombian government that it plans to withdraw from the national EPS health insurance scheme. They are supposed to be meeting with the company to negotiate what happens.

Colombia wants the gold from a Spanish Galleón, so do Bolivians

In 1708 the Spanish galleon San José was sunk by the British during the War of Spanish Succession. in the Caribbean sea off the coast of Cartagena. The shipwreck was found in 2015 in about 600 meters, or 328 fathoms, or 2,000 feet of water, and Colombia is claiming it as its own and using the military to fend off any would-be treasure hunters. Last month, Colombia announced that it was launching a research and recovery project, aiming to prioritize the historical value of the wreck. There are complications though. The ship was Spanish, so Spain would need to renounce any sovereignty over the wreck. Spain considers the ship a graveyard that should not be molested out of respect for the dead.

Down in landlocked Bolivia, the Chicha, Caranga and Killaka people have filed claims with UNESCO saying that their enslaved ancestors extracted the treasure onboard from mines in what is now Bolivia, and have a right to share in whatever wealth is in the shipwreck.

This is going to be an interesting case. There is a treaty, the 2001 Convention on the Protection of Underwater Cultural Heritage. Spain is a signatory, so is bound by the treaty, but Colombia never ratified or signed it, so is not bound by it.

Colombia has (finally) outlawed bullfighting

The Colombian house of representatives has outlawed bullfighting, a 500 year old tradition of bovine torture inherited from the Spanish. There are still people who defend bullfighting. The bill is in reconciliation with the senate, and then goes to President Petro, who is sure to sign it into law.

Mafia guerilla groups flourishing, expanding under Petro’s “Total Peace” fiasco

Reuters is reporting that it got access to a secret report showing that all the major criminal mafias in Colombia expanded in 2023, making a mockery of President Petro’s “Total Peace” initiative. Those criminal organizations would be the Clan del Golfo, ELN, and the two former FARC groups Estado Mayor and Segunda Marquetalia. Petro ran his campaign promising “Total Peace” but these groups, three of the four are avowed communist guerillas, and the Clan Del Golfo a descendant of paramilitaries, just keep getting bigger. When is Petro going to start?

Reuters also reported on illegal road building in the Amazon rainforest, in some cases by these same groups, that the government is supposed to be stopping. For example, Chiribiquete, nobody is even allowed to go in there but there are at least 12 illegal roads built, according to Reuters!

These mafias, in this case it looks like the Estado Mayor – former FARC, is building these roads to conduct illegal activities in nature preserves, and the government is unwilling to do anything, or at least, so far it is not combatting the activity.

So that’s it for this week.

Remember to practice critical thinking

Stay mentally and physically active,

And above all, be kind to yourself and others.

Seguros Sura sent out a statement to its EPS policy holders stating the following:

“The Colombian health system faces major challenges that have been going on for some time and have been aggravated by budget insufficiency in recent years. We have done everything we can to protect the lives and well-being of our members, including by evaluating different alternatives in the current legal framework and in the Government’s new proposals. However, at this time we must take steps to prevent further deterioration, which would prevent us from meeting our obligations.”

According to Sura, the current EPS system is not sustainable and does not provide enough funding for the services committed.  Sura operates a large private health care network, (similar to a HMO or Health Maintenance Organization in the US) with many private clinics and over seven thousand health professionals. Sura’s plan is to “go private” and deal with policyholders and patients directly, not participating in the EPS program anymore. In other words, individuals can purchase Sura private health care policies and pay directly in Sura clinics, but Sura seeks to withdraw from the EPS regimen, which pays a set price determined by the government to health care intermediaties.

Sura was quick to send out an email to private policy holders reminding them that what they have is not EPS Sura.

“Regarding your Health Policy, it is important to remember that you have contracted it with a company independent of EPS SURA. You will continue to have all the current coverage and benefits, such as direct access to the network of more than 7 thousand specialists and health institutions, exclusive care locations, home services, diagnostic aids, wellness program – Vive Más, among others.”

As Sura is a profitable company not facing liquidation or intervention, and is voluntarily seeking to retire from the EPS regimen, there will be no immediate change in service delivery, all clinics, appointments, and policy functions will continue as normal. Sura must now wait on a response from the Colombian government. Holders of Sura’s private healthcare plans such as their Classic and Global family health plans will not be directly affected by Sura’s plan to leave the EPS scheme. In fact, Sura states that its strategy is to focus entirely on its private plans.

First off, Colombian President Gustavo Petro spoke at the United Nations, world peace and sustainability the main themes, although he did delve off into other areas. Overall little to report.

Lot of headlines about the Colombian peso being the global top performer in 2023. To reiterate, this isn’t outperformance — it is a snapback from the wonton erroneous selling in the fourth quarter of 2022.

Fedesarrollo published its financial survey for September. Overall, there were few radical changes but we saw inflation expectations for 2023 rise and, accordingly, overnight expectations are also higher.

Imports for July, according to National Administrative Department of Statistics (DANE), dropped by 28.2% year-over-year. A weak figure indeed — but as exports were weaker that generated another $600 million USD trade deficit for the month. The domestic slowdown in demand continues.

Camacol Nacional reported that new home sales fell 52.2% in August to 8,699 units, as interest rates continue to bite. For the same reason, household spending for August (per RADDAR CKG LATAM) dropped 3.2% to 82.4 billion Colombian pesos.

The reform process continues but there have been no real developments to speak to, simply more edging forward.

Nutresa shareholders, as expected, voted through the Gilinski share swap, and the market is awaiting this development, which includes Grupo SURA and Grupo Argos.

Lastly, the markets showed a little more volume this week, although equities have yet to catch the imagination locally.

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This significant move marks the second major sale in a matter of days for the Medellín-based company after it sold its holdings in Argentina to Sudamericana Holding.

The sale of its El Salvador subsidiary also comes on the same day that Grupo Sura announced a 8.8% increase in profit in the second quarter, which saw total profits of $153 million USD despite a significant increase in operating expenses driven largely by exchange rate fluctuation in the Colombian peso.

“The results of this period reflect the greater devaluation of the Colombian peso against the rest of the currencies in the region and the consolidation of the AFP Proteccion,” stated the company in its results announcement.

With the moves, Grupo Sura continues to stay in the headlines.

The firm has been in news all year long due to its involvement in billionaire shareholder Jaime Gilinski’s high-profile pursuit, and eventual takeover, of Grupo Nutresa.

Photo credit: Grupo Sura

The deal between the two parties, which was reportedly hashed out in a luxury hotel in Spain during the San Isidro Festivities and finalized by May 24, will give Gilinski 87% of Grupo Nutresa, while seeing Grupo Sura and Grupo Argos relinquish any stock or control of the company to him and his partners.

In exchange, three companies owned by or working with Gilinski — JGDB Holding SAS, Nugil SAS, and IHC Capital Holding LLC — will sell any Grupo Sura shares they may have. The Financial Superintendency of Colombia authorized the suspension of the trading of these three companies’ stocks from May 25 to June 15 for the benefit of the investors in the three companies.

While the details of how the deal went down are still unclear as of press time, an unnamed source reportedly told local newspaper El Tiempo that former Colombian President Álvaro Uribe Vélez was involved in the discussions and even opened up his home in Rionegro to facilitate the discussions.

READ MORE: Former Bancolombia President in Speech to Gilinski: Stop this War!

The agreement, at least for now, provides a bookend to the years-long crusade that Gilinski has waged with GEA to take control of various companies, including lawsuits against each other and recent fights over Grupo Nutresa’s board of directors.

The fight has been seen as damaging to the reputation of both parties despite the market capitalization of the three companies rising, with Grupo Sura’s value jumping by some 95.4% since November 2021 and Group Nutresa spiking 165.9% during the same period.

Steffanía Mosquera, a market analyst from Credicorp Capital, has said that the deal will likely be good for all the parties involved. “[At] first glance, we believe that this transaction (or series of them) should be positive for the Colombian market in a context of low volumes,” she told El Tiempo. “We also see that the transactions could help simplify the structure of Grupo Argos and Grupo Sura, which could be seen as positive by investors.”

At the same time, according to reports, they would hand back any shares in Grupo Argos and Grupo SURA. The press is calling this the end of the GEA cross holdings however in reality at first blush, it appears, to the creation of a smaller GEA with Celsia Energía, Cementos Argos and Bancolombia the other main components.

There are still more questions than answers.

1. The Gilinskis first chased Nutresa but many felt the ultimate goal, for well-documented personal reasons, was Bancolombia. Have they now given up on that ambition?

2. What will happen with the stock price of Nutresa? It will remain with almost no free float or liquidity and in the hands of a group who appear to be able to add little value to the company.

3. Might Sura or Argos now be in a position to refloat their shares via secondary issues? Does the agreement cover future Gilinski participation in the shares of the two groups?

4. Will Carlos Ignacio, one of the world’s most decent human beings, remain with Nutresa after all the bitterness of the past 18 months ?

5. What will the Gilinskis do with Nutresa? Will it be a quick turnaround and a sale to a foreign group?

6. Will the sacrifice of such an amazing asset be worth it in order to maintain the huge social and philanthropic structure that the GEA maintains in Medellín, a non-tangible that most don’t want to see?

This soap opera has had more twists and turns than Dallas, Eastenders and Breaking Bad combined but one wonders what will come next. It has done irrefutable damage to the equity markers but hopefully there is now some light at the end of the tunnel.

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Gilinski and the “Paisas” (people from Medellín and its surrounding region) quickly fell out, and ended on bad terms, with litigation lasting for more than a decade. Things remained relatively quiet, with Gilinski tending to his many other business ventures, including plastics manufacturers, media. candy companies, and his own Colombian banks, GNB Sudameris, and Lulo Bank, as well as his own ATM network serving his banks, and many independent credit cooperatives (credit unions) throughout Colombia.

The Paisas, who in some ways have had a more modern business outlook than other regions of Colombia, created a cross-ownership structure of major Medellín businesses to prevent control by dominant families like in other parts of Colombia—think the Santo Domingo, Ardila Lülle, or Gilinski family business dynasties—and also impose a level of corporate governance not usually seen in Latin American countries. Medellín does not have a political or business dominant family “running things” behind the scene pulling all the strings, unlike most of Colombia, or most of Latin America. Instead, for example, El Pais reports that as of 2021, Medellín food conglomerate Nutresa had no shareholder with more than 1%. This means that professional management had the influence, and nepotism is kept out. There is a cross ownership structure among major Medellín companies that serves as a form of checks and balances, but also keeps control local to the Paisa community. This cross ownership structure is known as the Grupo Empresarial Antioqueño (GEA) informally, but such a structure does not exist formally. It is more of an informal clan with common interests rather than a legally defined entity. The major companies own shares in each other, and control is shared through voting shares and corporate boards.

Mr. Gilinski does not like this arrangement and has been seeking to vindicate himself against the Paisas. Though he is already reportedly Colombia’s 2^nd or 3^rd richest individual according to various rankings, that is not enough juice to take on the well-coordinated and insular Paisa business community. Gilinski himself sought a “patron” (sponsor, godfather, boss, backer) in Abu Dhabi’s Sheikh Tahnoon bin Zayed Al Nahyan, son of the founder of the United Arab Emirates. Since 2021, Gilinski and his backers have waged a war against the Paisas to take control of their jewels, namely Bancolombia, Grupo Sura, Nutresa, and Grupo Argos: All large, publicly traded international companies, and the economic engines of Medellín.

It is difficult to overstate the effect of this “invasion” as they see it, on the close knit Medellín business community. It is no overstatement to say that regardless of one’s opinion of any one of the companies, they are foundational to Medellín’s identity the way Microsoft is to Redmond, Washington or Apple is to Cupertino, California.

Former Bancolombia President Carlos Raúl Yepes came out of retirement and private life to take the microphone during the extraordinary shareholder meeting of Sura, Colombia’s largest insurance and asset management conglomerate, where Gilinski was trying to take control of the company, to make a stirring speech in which he directly addressed the “war” as many see it, between Gilinski and GEA.

Carlos Raúl Yepes:

I want, before anything else, to say that no one has ordered me to be in this assembly. I am no one’s adviser, I am no one’s spokesman, I am doing this because of my convictions. I do not have stocks in any of these companies, but last Monday I bought a share from Grupo Suramericana Inversiones to be able to intervene today. It cost me 38.600 pesos, plus taxes and commission, and here I am. And my one share is worth as much as Dr. Jaime Gilinski and his entire group’s. So I want you all to know that I am not a messenger, no one has sent me. I was at my house, and I saw what was happening, and I was seeing it with a lot of sadness. I felt bad, feeling like I had to stay silent. Just like no one was forcing me to stay silent, no one was forcing me to come here. I simply wish to express my sadness for this nightmare. I know what Juan Luis is feeling because he worked with me, same with the lawyers, the directors, and I know this suffering that comes with being at the front of these companies. Pressured, discredited, that which they call the GEA that does not exist, they are just convictions from some very important people who in the past, in the years 35, 40, 45, started companies, companies that today are the pride of the country, companies that today are demonstrating what they do on an international level, companies that have never, if you take notice, been involved in any scandals. Here the only thing we know how to do is work, work honorably, and we won’t let anyone discredit that.

Today, what I want is to expose my testimony, Dr. Gilinski, of the experience I had when we met all those years ago. You are an intelligent person, a bold one, you know I respect you, and you have always respected me. That’s why when I went with Gabriel [Jaime Gilinski’s father], when I was named president of the bank, I already knew him, from the respect I had for your father, and I still do. And at that time, we decided to buy a majority of the percentage of the Bank of Colombia, which Dr. Gilinski, very young, had acquired his majority percentage. I think that was the year ’94, and we did the business in the year ’97.

And it started really well, we were doing really well when the Asian crisis came. By the end of the year ’97, we wrote to Dr. Gilinski’s lawyers, I never forget the name, Davis Loan. They write to our lawyer in New York Michael Manny, and they tell us, we have some serious problems. In that transaction, we were scammed, and the war starts. A war that lasted a long time, a war where they told us, you have to suspend the assembly of the year ’98. A war that, with all due respect I say because I lived it, no one has told me what I am saying, I lived it. And what I did you will understand why, it was 12 years of suffering where I couldn’t watch my children grow, where we all suffered so much. We solved one lawsuit and we got three more, and we got accusations and complaints. And Dr. Gilinski, I haven’t told this, but this scar I have here, I called it Gilinski. When I had heart surgery, I broke down. I was 33 years old, and it was the first 6 years out of 11, almost 12 years of suffering.

I remember that at that time Julio Sánchez spoke of the dream team, and it was. How couldn’t it be the dream team, a great team of distinguished lawyers, comprised of Doctor Fernando Londoño Hoyos; Doctor Fernando Hinestrosa, Principal of the Externado; Doctor Néstor Humberto Martinez and his father, Doctor Néstor Camilo; Doctor Luis Fernando López, former superintendent of stocks, Doctor Gustavo De Greiff, the prosecutor, Doctor Jaime Bernal, a former attorney; dream team.

Former Bancolombia president Carlos Raúl Yepes blames his heart attack on battles with Gilinski (courtesy Bancolombia)

And I have to say one thing, because history needs to be relived, brought back, remembered, because now, what I want to end with, which is why I want to mention it: that legal dream team was a small part, because the way that it was structured, it was a business that started really well, and I don’t understand why with businesses you have to design a political strategy, a communication strategy, to push it forward, when the legal side is enough, the ethical side is enough; but no, there was that legal front, and do you know who was the legal vice president of the Bank of Colombia, who was at the front of the transaction and negotiation with the Colombian Banco de Sol? And who was my speaker partner, because Dr. Gilinski assigned him to be our speaker, and I spoke with him, and we stepped forward to have [Colombian fast food chain] El Corral burgers for lunch, when we were in the due diligence [process]? Sirs, the one who guided that legal strategy, and coordinated the entire strategy with Dr. Néstor Humberto Martinez, was Doctor Alex Vernot Hernández, today sentenced to 71 months in prison for bribing witnesses in criminal proceedings. That was the great ideologist. I don’t know what is today the relationship between Dr. Gilinski and Alex Vernot.

Gonzalo: Dr. Carlos Raúl, since we are in assembly-

Carlos Raúl: Don’t worry doctor, I’ll be done in 10 minutes. I won’t take longer than that.

Gonzalo: No. Five minutes, please.

Carlos Raúl: Thank you very much, Dr. Gonzalo. By the way, the first time I see Dr. Gonzalo Pérez in seven years, I haven’t seen him in a while, not even texting, just so you don’t go saying that I talk to him and they sent me here to do something.

And after that legal strategy, Dr. Gonzalo Pérez, there was the political strategy. Politics needed to be added to that. Dr. Néstor Humberto, who today is not on very friendly terms with Dr. Vernot from what I read, they met with a very passionate and intelligent chamber (congress) representative who used for the first time an article of the Constitution that allowed political control over private entities. And on May 9, 2001, they sat Dr. Jorge Rondolio and myself with the whole team, resisting that political onslaught in Congress.

That passionate and intelligent politician is now President Gustavo Petro. The political side was taken care of. Politics is part of that big strategy. Dr. Álvaro Uribe appointed Isaac the ambassador of Israel, and Dr. Juan Manuel Santos appointed Isaac at the UN, and Dr. Iván Duque did the same, appointing him as alternate ambassador. They are good recognized and meritorious people. And it’s just a small part, but it turns out that communication also needs to be involved, there has to be communication, we have to tell stories, have a narrative. And to hire a great political strategist, who is still working. Mr. Ángel Beccassino, today adviser to Mayor Daniel Quintero, the axis of the triumvirate, that’s what we were facing, that’s what was making us suffer.

And why do I tell this story? Because it’s relevant, and it’s relevant because it’s  (unintelligible), and it has different fronts of war, and I have Dr. Gilinski in front of me, and I know you know that what I’ve said is absolutely true, and please, if I haven’t said something correct, you’ll correct me. But all I want to say and end with, Dr. Gonzalo, and I’ll finish, is that this war has to be stopped. Enough of this nightmare. Business can’t be done like this.

Video recording credit: El Colombiano