Cablegate: Ecopetrol Partial Privatization Resounding Success
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
WHA/EPSC FOR FCORNEILLE; EEB/ESC FOR MMCMANUS
E.O. 12958: N/A
TAGS: ENRG ECON EINV EFIN CO
SUBJECT: ECOPETROL PARTIAL PRIVATIZATION RESOUNDING SUCCESS
REF: BOGOTA 6862
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.
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.