The real game changer could be the $4 billion initial public offering of state oil concern Ecopetrol, one of South America's four largest. In short order, it could become the most widely held stock on the exchange. And with U.S. bankers circling, a New York Stock Exchange (NYX ) listing could be in the offing. The only other Colombian stock listed in the U.S. is Medellín-based Bancolombia (CIB ), whose shares have jumped twentyfold in the past five years.
Indeed, Wall Street is doing its best to ride the Colombia wave. In 2005, SABMiller (SAB.L ) PLC took over Colombia's biggest brewery, Bavaria, for a record $7.8 billion, with Merrill Lynch (MER ), JPMorgan Chase (JPM ), Lehman Brothers (LEH ), Morgan Stanley (MS ), and Citigroup (C ) advising on the acquisition. Last year ABN Amro advised on the sale of a controlling $657 million stake in a key oil refinery to Switzerland's Glencore International. "You're having more and more investment banks going into Colombia," says Eric Newman, a Bogotá native who was recently poached from Lehman Brothers by Morgan Stanley to cover the country for its Miami-based Latin American private banking arm. He shuttles to Colombia 20 times a year.
Not only are Colombia's top companies doing better at home, they're also branching out to the rest of Latin America and beyond. A company called Chocolates, essentially Colombia's Kraft Foods (KFT ), now ships to Los Angeles and the Southwest, while Argos, the country's foremost cement producer, has been buying operations in Arkansas, Georgia, North Carolina, and Texas. Bancolombia recently acquired El Salvador's largest bank.
One sign of the rising fortunes in Colombia is the sudden misfortune of the self-proclaimed Bulletproof Tailor. Miguel Caballero makes suits and other apparel tough enough to withstand gunshots. His garment factory, located in a seedy neighborhood of Bogotá, features a picture gallery of famous customers, including action film star Steven Seagal and President Uribe, as well as glossies of Caballero discharging his handgun into the bulletproofed torsos of employees. Ten years ago, he says, his company sold 70% of its wares in Colombia. Now, thanks to the ebbing violence, that figure is just 20%. Caballero is dispatching salesmen to Russia, Venezuela, even Iraq. "The idea is to save the business," he says. "You can say we're globalizing."
The growing confidence in Colombia brings a new set of challenges. The streets are safer, and citizens are road tripping again. Export-import activity is steadily growing. Tourism has nearly tripled in five years, and beach-lined, historic Cartagena is among South America's most expensive real estate markets. But with all of that happening, Colombia's highways, roads, ports, and other industrial backbones are becoming increasingly overburdened. "We're really behind on infrastructure," says Juliana Ocampo, a recent MBA from Massachusetts Institute of Technology who returned to Bogotá to work for Mexican cement giant Cemex. "If you ask everyone here, that's where the investment needs to flow next." Says Gaviria, the young money manager: "Our north port is terrible. If we had a world-class port project, I would invest right then and there." Bear Stearns warned in a recent report that growth could halt if tens of billions worth of infrastructure isn't soon built, noting that Colombian pension funds are clamoring to invest. If the buildout stalls, it will undermine Uribe's reforms.
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I take up the issue with Vice-President Francisco Santos. Schooled in Texas and Kansas and formerly the editor of Colombia's largest daily newspaper, Santos was once kidnapped by Pablo Escobar's men and surely draws satisfaction from the fact that the cartel's late-'80s vehicles sit rusting in a pound adjacent to his office. "The roads are getting so clogged," he concedes. "But who will pay for all the infrastructure?"
Financiers argue that the money is there for the taking, if only the government would change its thinking. Historically, Bogotá has issued bonds to fund such projects, but investors were hungrier for them when they yielded 20%. It also takes time to rouse all the layers of bureaucracy in the way. Bankers want the government to sell equity in the projects instead, following the privatization trend sweeping Europe and the U.S. "We can build roads without a penny of government money," insists Pedro Nel Ospina, the head of Corficolombiana, one of the country's top investment and merchant banks. "Let us do it already. Give us equity."
The government isn't ready to make that leap just yet. But the fact that a vigorous debate about how best to become an ownership society is heating up—complete with business page editorials and regional free-trade zones—shows how far this rugged stretch of the Andes Mountains has come.
Medellín, in particular, is undergoing one of the most extraordinary urban makeovers in modern times. "Our trucks, drivers, and distributors were attacked at least once a day," recalls Carlos Enrique Piedrahita, president of Chocolates, of the scene seven years ago. "Now it just doesn't happen."
The 45-minute ride to town from Medellín's main airport winds through lush forests and fragrant flower farms. The city is shaped like a bowl, with commerce and wealth concentrated at the center as poverty stares down from the rim. It all descended into chaos with the decline of Medellín's textile industry in the 1970s and the simultaneous rise of the drug trade. In 1991, two years before Escobar met his end in a rooftop gunfight with police, he was recruiting cocaine-addicted teens in the hillside slums, paying them $750 for every police officer they murdered. Gang shootouts continued into emergency rooms. "One can have the impression that Medellín is about to drown in its own blood," The New Yorker magazine's Alma Guillermoprieto wrote in 1991, when the city's homicide rate was 381 per 100,000, the highest in the world.
But exploding revenue from Medellín's resurgent corporate tax base is funding a rapid metamorphosis. Now those very same shanties are connected to the city center by a sky-lift gondola of the sort you might find at EPCOT Center. New libraries and schools court students from other parts of Colombia. "Imagination Park" stands where murdered bodies were once dumped. The business assistance office in the heart of the slum is helping tiny food stores and Internet cafés flourish where there used to be only crumbling cinder block and exposed sewer pipes. Today, Medellín's murder rate is 28 per 100,000, lower than those of Baltimore and Washington, D.C.
Statistics alone don't capture the sense of rebirth here. Atop the slum, in the shadow of ascending gondolas and a new computer lab, the city's poorest children think they're kings of the hill. They chase after me, tugging at my jacket, 30 or 40 at once. It's not my money that they want, it's pictures of themselves and their friends. As I sit down to catch my breath, a runty seven-year-old boy with a precocious understanding of digital photography suddenly climbs out from under the bench. "I don't have e-mail yet," he says. "So print it for me for when you come back, O.K.?"
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