Ashmore Group and Confederación Andina de Fomento (CAF) have plans to close next month a private equity fund to provide senior debt for infrastructure projects in Colombia.
The fund, managed by CAF and Ashmore, will allow 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, which has a target size of US$1 billion. Ashmore will also allocate US$30 million. According to CAF, the fund will be the first senior debt fund in Latin America.
CAF Executive Vice President Luis Enrique Berrizbeitia, stated:
"CAF brings its expertise in project finance, infrastructure finance. Ashmore brings its expertise in fund management and infrastructure in EM and Colombia. We hope we'll be able to translate that into an increased flow of financing for these critical infrastructure projects."
The fund is expected to support, among others, the Colombian Fourth Generation (4G) road construction 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 and will furnish a road infrastructure more suitable to the economic development of the country.
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 in Uruguay is planned to be developed. 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.