Announcement of IFC Investment in Colombia on April 1, 1964

,, • INTERNATIONAL FINANCE CORPORATION . 1 8 1 8 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 IFC Press Release No. 64/7 Subject: IFC investment in Colombi~ For releaae .r~,1 newspapers April 1., 1964 The International Finance Cocyoration, an affHiate of the World Bank, has agreed to join Colombian interests in expanding the financial resources of the eorporacion Financiera de Caldas, a p~ivate coopany established in 1961 to en- <"Ourage deve:1-opnent in the Caldas region of Colom·oia. by financial and tech..'1icR..l assistance to new or growing industries. IFC will inve$t the equivalent of Col$ 7,000,000 (US$700,oco) in capital stock of the coop~~y; existing shareholders have recently taken up Col$ 6.7 mil- • lion of new shares. The F'inanc:.i.era 's subsc!'ibed capital will thereby be iu- cr~ased to Col$ 41.9 million. This is IFC's third investment to assist in the expansion and strengthening of private industrial development finance companies in Colombia. The Caldas Financiera has its headquarters in Manizales in the Department of Caldas, and although authorized to operate throughout the country, concen- tr:ites its activities in Caldas and the neighboring Department of Tolima. The Fiuanciera's shares are held by nearly two hundred investors, inc~uding t:v.d.de associations, banks, industr:i.al enterprises and individuals, most of whom have other interests in the Caldas region. The shareholders include the National Federation of Coffee Growers, the Federation's regional comraittees in the Depart· ments of Caldas and Tolima, the Banco Cafetero, a commercial bank owned by the Federation, and Banco del Comercio, a private commercial bank • •  J •4 - 2 - Up to now, the economy of the Depa.:;.."iiment of Caldas has bee11 heavily dependent upon coffee, and it produces one~third,of Colombia's output of that crop. Business • leaderf:.' of the region have ma.de concerted efforts to d.i.versify the Caldas econ.omy. The establishment of the Financiera was one of the main measures taken to achieve th~.s objective. Industrial output and investment have expanded rapidly during ~he past decade and prospects of additional gro'Wth and diversification of the economy are good. The Financiera, the Fede!'a.tion of Coffee Growers and the Banco Cafetero arc cooperating in a five-yea.l~ program (1963-67) to foster the development of industrial output, especially of food products, beverages,. textiles, btlilding materials, chemicals, metal and wood products. Parallel to the industrialization effort, a program to diversify agricul·tural prod.uctj.on is being carried out. • Because of the large and growing market in the Caldas area, and in Colombia gererally, and because of the investment opportunities presented by mineral and I L... fo::c·est resources of' the region., it is expected that the demand of industry for both finance and technical assistance will continue to grow. P-.coducers in Caldas are well placed to serve markets in the nearby Departments of Cund.inama.rca, Antioquia and Valle, where economic activities are expanding and the demand for manufactured goods is high. The investment operations of the Caldas Financiera have included equity participations, short, medium and long-term loans, underw~itings and guarantees. As of December 1963, the Financiera had made equity investments aggregating Col$ 4.9 willion and some 400 loans aggregating Col$ 56.6 million. In addition to its loans and investments, the Financiera has sponsored a new chemical 1 1Lmt and two mining companies, and is actively promoting other industrial ventures • • '{/" r.  - 3 - • I!l addition to Caldas Financie:ra.'s share capital, to which has been added reserves and retained earnings of about Col$ 3 millj.m:1, the Fim:mc:tera' s finan- cial resources include loans, o~ advantageous terms, from Banco de la Repub~ica (Colombia's central bank), bonds wh!ch the Financiera hao been able to place w:.th insurnnce companies, and credit facili;ties rr.ade available by Uni-f;ed States commercial banks. IFC 's investment will be in the form of a suliscription to 70,000 shares of capital stock, each w-~th a par value of Col$ 100, for a total investment of Col$ 7 million. In August 1961, :ni~c made loans to two other Colombian development finance institutions -- Corporacion Fina.uciera Colomb:i.ana de Desa.rrollo Industrial, of Bugota, and Corporacfon Finauciera Nacional, of Medellin. Both of these loans were subsequently converted into capital stock. The investments in the finan- • c~.eras of Bogota and Medellin were tr..e first undertaken by IFC to asstst develop- m~nt finance companies. Since then, assistance to private companies of this kind has become a major field of activity of IFC. Including the investment in the Calclas Financiera, IFC has now invested in 13 indus't;rj.al deyelopment finance companies located in 11 member countries. Apart from its investments in the financieras, IFC has made 6 other invest·· mcnts in Colombia totaling $4.2 million in companies manufacturing textiles, food products, fiberboard, metal cans, electrical equipment and f'urniture • •