CAF and Ashmore close Colombia infra debt fund

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CAF and Ashmore close Colombia infra debt fund

Confederación Andina de Fomento (CAF) and Ashmore Group have closed the Colombia infrastructure debt fund, a private equity fund to provide senior debt for infrastructure projects in the country.

The fund, which had a target size of US$1 billionhas raised a total of P1400 billion (US$445 million). The fund is the first senior infrastructure debt fund in Latin America. It will provide long term financing for infrastructure projects, specifically the debt provided by the fund will have a term of more than 20 years.

The fund, managed by CAF and Ashmore, allows Colombian pension funds and other private investors to participate in domestic infrastructure projects. In July 2014 CAF announced the approval of an investment of up to US$50 million in the fund. The fund took two years to be structured and involved the development of certain legislation in colombia so that pension funds could invest in this kind of private equity debt funds.

It is expected that the private equity vehicle will support, among others, the Colombian Fourth Generation (4G) road concessions program. This ambitious programme includes 40 projects to build some 8,000 km with a total investment of US$17.5 billion. Projects will be carried out under a public private partnership (PPP) approach.

The Colombian government is currently working on the second wave of 4G highway projects, which includes a total of 9 concessions.

A similar CAF-backed fund is planned to be developed in Uruguay. Its target size will be between US$300 million to US$400 million. The fund aims to help channel pension fund financing to infrastructure projects in the country.

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