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Walk around Medellin, Colombia’s second city, and you’re never far from a bank, office or store controlled in one way or another by Grupo Impresarial Antiocheno, the most powerful conglomerate in the nation.
At the corner of the street are the branches of the country’s largest bank, BanColombia. Inside the gleaming glass towers sits the headquarters of Grupo de Inversiones Suramericana, Colombia’s largest financial conglomerate with stakes in banking, insurance, pensions and asset management. Buy food in the city’s supermarkets and chances are it’s produced by Grupo Nutresa, which began life as a Medellin chocolate maker over a century ago and is now one of Latin America’s largest processed food companies.
All of these companies, and more than 100 of them, are part of GEA, a network of companies in Medellin and the surrounding Antocia department with interconnected stock distributions and family ties. Between them they hold more than half the value of Colcap, the main index of the Colombian stock exchange.
The structure of the group is similar to Japan Kiritsugu, Firms have close relationships with each other, making these firms less likely to interact with outside regulators. That’s why the group was originally formed in the 1970s to protect Medellin-based companies from Bogotá control.
But now more than ever, GEA is under attack.
Late last year, Colombian businessman Jaime Gilinski teamed up with the Abu Dhabi royal family to launch a series of hostile bids to open GE’s tightly-knit structure. Gilinsky said the companies failed their investors.
In a recent interview in London, “the management did not pay attention to the shareholders,” he told the Financial Times. “Stock dividends were great for managers to keep control, but what were shareholders getting?”
Gilinski’s bid shook Colombia’s moribund stock exchange and sent ripples throughout the region, where hostile takeover bids are relatively rare.
“We’ve had controls in Colombia before, but the difference this time is that they’re hostile and they’re big,” said Juan Camilo Jimenez, head of equities at CrediCorp Capital in Bogota. “These are powerful companies not only because of their weight on the stock market, but because of their national and regional importance.”
Gilinski’s six consecutive bids targeted the three main GAIA companies – Sura, Nutresa and industrial conglomerate Grupo Argos. Gilinsky and his partners have spent about $2.8 billion — more than half of his personal wealth, according to Forbes — and have signaled their intention to continue.
They now own 38 percent of Sura and 31 percent of Nutresa. That gives them an indirect stake in BanColombia and other important GE companies.
But GEA is struggling. The companies have made strategic appointments to their boards to avoid conflicts of interest among board members in order to increase their voting power against Gilinski’s attacks.
“This makes Gilinsky’s desire to settle GEA a very difficult proposition,” said Luis Ramos, senior Columbia analyst at regional asset management firm Larain Vial.
Those who work at GEA companies told by the FTA – Sura, Argos and energy company Celsia – object to Gilinski’s criticism as having shown investors to be dismissive.
“Grupo Sura’s total equity value has grown 36-fold in the last 20 years,” CEO Gonzalo Perez told the FT in an interview in Medellin. “For the same period, our segments grew at a compound annual growth rate of 10 percent per year.”
They argue that they should be measured not only by stock price and return on investment, but also by their contribution to the local community. Sura has plowed around $70 million over the past decade into other social, educational and cultural projects in Colombia and Latin America.
Maria Bibiana Botero, executive director of ProAntioquia, which promotes development in the region, said: “These companies have provided social and economic benefits in a very complex time.” “During the drug bust, and more recently in [coronavirus] Their contribution was crucial in dealing with the medical emergency in the region. They saved lives.”
But the group has its critics even in the stronghold of Medellin, among them the clearly left-wing mayor Daniel Quintero, who in an interview with Semana, a news magazine bought by Gilinski this year in 2020, named GEA among the groups. Claims bankrupted the city’s finances.
However, Quintero did not provide any evidence for the claims and declined to speak to the FT for this article. Some GEA organizations have threatened to sue Quintero for defamation.
The effects of the battle will be felt far beyond the Colombian border. Between them, GEA companies reach beyond the country. Grupo Sura operates in 11 countries in Latin America. Nutresa ships to over 70 countries worldwide.
GEA generates 6 percent of Colombia’s GDP, according to ProAntioquia.
“GEA companies are one of the engines of growth in the region and have been driving all public policies in Medellin and Antioquia for decades,” said Javier Mejia, a Colombian economist who has studied the group. “For a long time they were the only channel through which people had access to the formal economy in Antioch.”
For now, Gilinski’s bids appear to have stalled. His latest stock build in Nutresa in May and Argos in July was less than he wanted.
Laraine Viall’s Ramos predicted that this could prompt a “pause in the Gilinsky and GIA saga” over the next few weeks and months. However, he added, “But Jilinski’s significant investment in GEA companies suggests this is not the end of the line.”
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