By late July 2015, Colombians had about 149 trillion pesos saved in mandatory pensions, plus 13 trillion in voluntary pensions and more than 9 trillion in severance funds. Some of these resources, which are managed by pension fund administration firms, may now be allocated to finance infrastructure projects in Colombia under Public Private Partnerships ("PPPs").
This document briefly highlights the regulatory changes that allow using the above resources to finance infrastructure projects.
By means of Decree 1385 of June 22, 2015, the Ministry of Finance amended Decree 2555 of 2010 as it relates to the investment regime for mandatory pension and severance funds, insurance companies and capitalization firms. The change aims at facilitating the participation of institutional investors in the financing of infrastructure projects undertaken in the form of PPP projects; it focused on the requirements for investment in assets where the issuer is a related company, and limits for investment in such securities.
Qualification Requirements for Investment.
Decree 1385 amended the eligibility requirements for admissibility of investments and changed aspects of the limits on investment: it expressly states that investments will not be admissible in private equity funds that invest in assets, shares and securities where the issuer, acceptor, guarantor or owner is the institutional investor, affiliate or subsidiary of same; or its parent or affiliate or subsidiary thereof. There is an exception for cases of private equity funds that allocate at least two-thirds of their investors' contributions to infrastructure PPP projects regulated under Law 1508 of 2012.
Notwithstanding the above, in order to ensure transparency of the investments, these must be approved by the board of directors of the institutional investor, which in turn must ensure that the professional fund manager and investment committee members are independent. In addition, the sum of the shares managed by the institutional investor, belonging both to it and to its affiliates, must be less than 50% of the...