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Bancolombia’s watershed moment

Bancolombia’s BIB proved that it could get its parent’s follow-on away in difficult markets. Now it is looking to good customer relations to help it expand across the region

Ricardo Jaramillo Mejia, Bancolombia
Ricardo Jaramillo Mejia, Bancolombia

In February, Bancolombiawas advised to postpone its Ps2.66 trillion ($1.4 billion) follow-on offering. International banks believed the difficult equity markets throughout Latin America would make the deal unviable, or at least inadvisable, in pricing terms, and with several other transactions being pulled from the market at that time there was a sound basis for the advice. However, Banca de Inversíon Bancolombia (BIB), the bank’s own investment bank, took the opposite view. Ricardo Jaramillo Mejía, head of investment banking at BIB, understood the bank’s strong desire for capital, to maintain its growth. He also recognised the firm foundation that retail investors play in equity deals in Colombia generally, and specifically for companies with proven track records.

BIB’s decision to proceed paid off: the bank closed a successful deal, pricing shares at Ps24,200 each, above the Ps21,350 to Ps23,200 guidance range it set in January. The final price represented a discount of 4.9% over the last price during the subscription period but a premium of 4.3% over the price before launch. The bid-to-cover ratio was 2.7 times for the 110 million preferred shares on offer.

It proved to be a watershed transaction, not only for Bancolombia as a whole, but also for BIB’s growing reputation as the leading investment bank in Colombia.