Identifier | Created | Classification | Origin |
---|---|---|---|
07BOGOTA7088 | 2007-10-02 14:26:00 | UNCLASSIFIED | Embassy Bogota |
VZCZCXYZ0009 RR RUEHWEB DE RUEHBO #7088 2751426 ZNR UUUUU ZZH R 021426Z OCT 07 FM AMEMBASSY BOGOTA TO RUEHC/SECSTATE WASHDC 9219 INFO RUEHBR/AMEMBASSY BRASILIA 7772 RUEHCV/AMEMBASSY CARACAS 9356 RUEHPE/AMEMBASSY LIMA 5445 RUEHZP/AMEMBASSY PANAMA 0668 RUEHQT/AMEMBASSY QUITO 6043 RHMFIUU/DEPT OF ENERGY WASHINGTON DC |
UNCLAS BOGOTA 007088 |
1. (U) SUMMARY: On September 25, Colombia's state-owned hydrocarbons company Ecopetrol completed the first round of its partial privatization, successfully selling a 10.1 percent stake to a mix of Colombian companies and private citizens. The offering, which raised USD 3.3 billion in new funds for Ecopetrol, significantly exceeded goals for the total number of participants in the sale (469,290) and average number of shares purchased per participant (six). The sale, the largest privatization offering in Latin America this year, builds on the highly successful September 18 auction of nine new offshore exploration blocks (reftel) and underscores the growing confidence in Colombia's hydrocarbon sector. END SUMMARY. Breaking Records -------------------------- 2. (U) The GOC launched the first-ever public offering of Ecopetrol shares on August 27 with a goal of attracting 250,000 new shareholders. Attracted by the high price of oil and the chance of owning a piece of Colombia's biggest company, 469,290 Colombians submitted purchase requests. Shares were bundled in 1.2 million Colombian peso (USD 600) packets, with bidders purchasing an average of six packets each. Colombian pension funds purchased approximately one-third of the shares, while other major buyers included Bancolombia, Banco Davivienda, and Fenalco. Due to the greater than expected demand for shares, the GOC is considering prorating the largest share purchases to ensure that all 469,290 purchase requests receive at least one share. The sale generated more than USD 3.3 billion in new capital for Ecopetrol and exceeded the GOC's goal for the first round by USD 1 billion. More Investor Confidence and More Investors Period -------------------------- -------------------------- 3. (SBU) Jorge Londono, President of Bancolombia, now the largest single private stakeholder in Ecopetrol with a 1.7 percent stake, told Econoffs September 26 that the highly successful Ecopetrol sale will bolster investor confidence throughout Colombia and encourage the GOC to move forward with additional privatizations. National Association of Financial Institutions (ANIF) President Sergio Clavijo echoed the sentiment adding that the inflow of private capital will help improve transparency and accountability in Ecopetrol. Both praised the "democratic" handling of the privatization citing the fact that Colombians from every department purchased shares and grocery store outlets sold 15 percent of the total shares. The Second Round and Beyond -------------------------- 4. (U) GOP officials, boosted by the success of the first round, are now confident that they will complete the partial privatization in a second round offer by the end of 2007. The GOC expects to adjudicate the first-round share sales by early November. The company's 20 largest private stakeholders will then elect one representative to the board of directors before scheduling the second round of the privatization. Although details on the structuring of the second round are not final, the GOC plans to open it to international investors and will not offer short-term financing to Colombian citizens to purchase shares as in the first round. The GOC aims to list Ecopetrol on the New York Stock Exchange by August 2008. 5. (U) Ecopetrol, which has suffered from a lack of investment capital for decades, has already begun to revise upward its near-term plans for expanded exploration and investment under the privatization process. The company plans to use its new funds to pursue a combination of offshore exploration in Colombian waters and international joint venture opportunities around the region. Brownfield |