International Finance Corporation (IFC), the private sector arm of the World Bank Group, has signed an agreement to purchase equity worth up to US$15mn in Grupo Petrotesting, a Colombian oil and gas company.
Petrotesting shares with IFC a commitment to sustainable development, and the collaboration aims both to channel oil and gas royalties more effectively toward efforts to reduce poverty and to implement best practice environmental and social programme.
Petrotesting, an entrepreneurial company at an early growth stage, will use IFC’s equity investment to strengthen its expansion strategy in Latin America.
“This transaction reaffirms IFC’s commitment to supporting the growth of Colombian companies that are operating in the local oil and gas sector.
Petrotesting’s commitment to long-term sustainable development in Colombia and the Andean region and its strong growth potential are important factors in making this investment,” says Rashad Kaldany, IFC’s director for oil, gas, mining, and chemicals.
Frank Kanayet, chairman of Petrotesting, says: “We are very pleased with the IFC investment. This will allow us to accelerate the development of our assets and to expand our operations, both in Colombia and internationally.”
Atul Mehta, IFC’s director for Latin America, notes: “The financing to Petrotesting fits well with IFC’s strategy of supporting local oil and gas companies in Colombia that are looking for sustainable growth and sound expansion in the region.”
Manuel Gonzalez, executive vice-president of Petrotesting, says: “Having IFC as our partner will help us access global markets and continue with our social and environmental work. This is important as we continue to build a better country, where peace can be a reality.”
IFC’s total portfolio in Colombia was US$280mn as of June 2005. Since Colombia joined IFC in 1956, the corporation has provided US$1.4bn, including syndications, for 58 companies.
IFC’s strategy in Colombia involves increasing support to strategic sectors for economic growth in the context of free trade agreements. This strategy includes financing infrastructure projects, such as port expansion and road and airport concessions, as well as support to companies in the logistic services sector.
In addition, IFC seeks to finance oil and gas companies that are expanding in the region. The financial sector also continues to be one of IFC’s priorities in Colombia, with special emphasis on housing finance and microfinance, as well as strengthening local capital markets and improving corporate governance.