Walk around Colombia’s second largest city, Medellin, and you’ll never be far from a bank, office or store that is somehow controlled by the Grupo Empresarial Antioqueño, the country’s most powerful corporate alliance.
On street corners, there are branches of Bancolumbia, the country’s largest bank. Inside the gleaming glass towers sits the headquarters of Grupo de Inversiones Suramericana, the largest financial conglomerate in Colombia, which owns stakes in banks, insurance, pensions and asset management. Buy food from the city’s supermarkets and opportunities to produce it by Grupo Nutresa, which started its life as a chocolatier in Medellín more than a century ago and is now one of the largest food processors in Latin America.
All of these companies, and more than 100 others, are part of the GEA, a network of companies in Medellin and the surrounding department of Antioquia that are linked together through a complex network of mutual contributions and family ties. Among them, they account for more than half of the value of Colcap, the main index of the Colombian Stock Exchange.
Group structure, Japanese style kiritsu As the companies form close associations with each other, this has made these companies almost unapproachable to outsiders. In fact, this is why the group was created in the first place, to protect Medellin-based companies from takeovers from Bogotá in the 1970s.
But now, as never before, GEA is under attack.
Late last year, Colombian businessman Jaime Gilinsky, in partnership with the Abu Dhabi royal family, announced, Launched a series of hostile bidding offers To open the sealed GEA chassis. Jelinsky says companies have failed their investors.
“Management was not caring about shareholders,” he told the Financial Times of India. recent interview in London. “Common stock was great for directors to maintain, but what were the shareholders getting?”
Jelinsky’s bids rattled the moribund Colombian stock exchange and sent waves across the region, where hostile takeover bids are relatively rare.
“We’ve had acquisitions before in Colombia, but the difference this time is that it’s hostile, and it’s big,” said Juan Camilo Jimenez, head of equity at Credicorp Capital in Bogota. “These are strong companies, not only because of their weight in the stock market but also because of their importance at the national and regional level.”
Gilinski’s six consecutive bids targeted the three core GEA companies – Sura, Nutresa and the industrial conglomerate Grupo Argos. Gilinsky and his associates have spent about $2.8 billion — more than half of his personal net worth, according to Forbes magazine — and signal their intent to continue.
They now own 38 percent of Surat and 31 percent of Nutrica. This gives them indirect stakes in Bancolombia and other important GEA companies.
But GEA is resisting. Its companies have made strategic board appointments to remove conflicts of interest among board members, allowing them to increase their voting power in the face of Jelinsky’s attack.
“This made Gilinski’s intent to dismantle GEA from within a bid much more difficult,” said Luis Ramos, chief Colombia analyst at regional asset manager LarrainVial.
Those who work at the GEA companies the FT spoke to — in Sura, Argos and energy company Celsia — dismiss Gilinsky’s criticism of investor failure.
“The total equity value of Grupo Sura has grown 36 times over the past 20 years,” CEO Gonzalo Perez told the Financial Times in an interview in Medellin. “Our earnings have grown over the same period at a compound annual growth rate of 10 percent annually.”
They also argue that they should be judged not only by their stock price and return on investment but also by their contribution to local communities. Sora has spent about $70 million over the past decade on social, educational, and cultural projects in Colombia and elsewhere in Latin America.
“These companies have provided social and economic value in the most complex times for both Medellin and the country as a whole,” said Maria Bibiana Botero, CEO of Proantioquia, a foundation that promotes development in the region. They have stood firm during drug violence, and more recently during [coronavirus] The pandemic Their contributions have been crucial in dealing with the medical emergency in the region. They saved lives.”
But the group has its critics even in its Medellin stronghold, among them outspoken left-wing mayor Daniel Quintero, who, in an interview this year with Semana, a news magazine that Jelinsky bought in 2020, named GEA among a handful of entities he said. Claims wiped out the city’s finances.
However, Quintero provided no evidence for his claims and refused to speak to the Financial Times regarding this article. Some GEA companies have threatened to sue Quintero for defamation.
The outcome of the battle will be felt beyond the borders of Colombia. Among them, GEA companies reach far beyond the country. Grupo Sura operates in 11 countries in Latin America. Nutresa exports to more than 70 countries around the world.
GEA generates nearly 6 percent of Colombia’s gross domestic product, according to Proantioquia.
“GEA companies have been one of the engines of development in the region and have run every part of public policy in Medellin and Antioquia for decades,” said Javier Mejia, a Colombian economist who has done in-depth research on the group. “For a long time, they were really the only channel through which people could access the formal economy of Antioquia.”
For now, Jelinsky’s performances appear to have been discontinued. His newest building in Nutresa in May and Argos in July didn’t quite live up to what he was looking for.
LarrainVial’s Ramos predicted that this could lead to a “pause in the Gilinski vs. GEA saga” over the next few weeks and months. However, he added, “But Gilinski’s massive investment in GEA companies indicates that this is not the last batch.”