Fuller pipelines and increases in deal closures solidify expectations for a more active deal market. Almost half (47%) of Colombian executives anticipate an increase in deal pipelines, and 70% are seeing an increase in the number of deal completions in the next 12 months. This represents a 36 and 59 percentage point increase, respectively, from April 2018. Deal activity is largely concentrated in retail and consumer products, infrastructure and technology.
As the deal market continues to heat up, 85% of Colombian executives expect to face stiffer competition for assets; 57% think the competition will come from private capital. However, it may not be coming from local private equity (PE) players. Local PE firms have been struggling to raise funds, giving global PE companies with lots of firepower an opportunity to penetrate the Colombian market.
Despite economists’ fears of headwinds that could impede global growth, global PE firms and domestic corporates alike are encouraged by the strength of Colombia’s macroeconomic outlook:
- 81% of Colombian executives see global economic growth improving (versus 74% in April 2018)
- 92% see it improving domestically (versus 63% in April 2018)
Colombia’s economy continues to sustain solid growth, elevating consumer and business confidence. At the same time, new policies from the Ministry of Finance should help alleviate rising budget pressures. As a result, three quarters or more of Colombian executives expect corporate earnings, short-term market stability, credit availability and equity valuations to improve.
Colombian executives also expect their own corporate fortunes to improve, with two-thirds (66%) anticipating revenue growth rates of more than 10% in the year ahead. To help achieve their growth objectives, half of Colombian companies are focusing on working capital and cash flow optimization as they look to strengthen financial discipline across all their back-office operations so that they can reallocate capital for more flexible decision-making. Colombian companies are also planning significant investments in technology, with the top priority for one-quarter of executives being to improve internal efficiencies, followed by improvements to financial data access and analysis.