Latin America development bank, Confederación Andina de Fomento (CAF), announced on Wednesday that it has approved an investment of USD 50 million in a private equity fund that will provide senior debt for infrastructure projects in Colombia.
The target size of this fund is the equivalent in pesos to US$1,000 million.
CAF and Ashmore Group will be the fund managers.
Colombia has commenced the transformation of the road infrastructure sector. The idea is to eliminate the backlog accumulated through many years, to integrate the country and improve its competitiveness in the face of Free Trade Agreements (FTA).
It is for this reason that the Fourth Generation (4G) of the Road Concessions Program has been developed. This ambitious programme includes 40 projects to build some 8,000km with a total investment of $25 billion during the course of the next seven years. 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.
Several road concessions part of the 4G Road Program have already been awarded. See more in our database of projects in Colombia.
With this fund, CAF seeks to facilitate the channeling of resources from institutional investors to the country's infrastructure, through the senior debt instrument.
Enrique García, Executive Chairman of CAF, said:
"Colombia is one of the countries with the most significant challenges in infrastructure development. In that sense the fund becomes an important tool to support companies and projects with long-term financial resources, appropriate terms and conditions. He added that this fund is the first vehicle that CAF creates in its strategy of modernizing its financial products.""This is the first exclusive senior debt infrastructure fund in Latin America."
He also said that the development and establishment of this fund supports Colombia by deepening its capital market. The funds helps to link institutional investors, including pension funds, to infrastructure.