COLOMBIA: An Introduction to Corporate/M&A
Outlook for the M&A Landscape in Colombia in 2025: Key Drivers and Trends
As we enter 2025, the M&A landscape in Colombia is being shaped by a complex mix of political, economic and regional factors. The dynamics of Colombia’s business environment are undergoing significant transformation, driven by both local and global trends that will influence deal-making across multiple sectors. While the region has experienced notable volatility in the past, a number of factors now suggest that Colombia is increasingly viewed as a more stable and attractive market for investment, even in the face of ongoing geopolitical uncertainties.
Political risk: mitigation of Petro's impact
A central theme in Colombia’s M&A activity over the past few years has been the political risk associated with the presidency of Gustavo Petro. His administration, with its progressive agenda and focus on social reforms, raised concerns among investors who feared that radical changes in economic policy could disrupt market conditions.
However, as we move into 2025, the risk associated with Petro's presidency seems to have been mitigated to a significant extent – or has at least been discounted by the market. The shift in economic policy has proven less disruptive than expected. The government’s more moderate actions in key areas like taxation and foreign investment, the independence with which the courts have assessed some of the government’s measures and the role of Congress seem to have reassured the business community. While Petro’s government continues to prioritise social and environmental goals, it is becoming increasingly clear that Colombia’s institutional stability – coupled with the resilience of its private sector – has limited the disruption that was initially feared. This will likely continue to reduce perceived political risk in the M&A market, making Colombia a more attractive proposition for international investors looking for stability in the region.
Infrastructure and roadway sector developments
An important sector that will see substantial M&A activity in 2025 is Colombia’s infrastructure, particularly in the area of roadways and transport networks. Over the past decade, the Colombian government has made significant investments in its infrastructure, but there is still a large gap to be filled, especially in rural and less accessible regions of the country. With road transport being vital for trade and economic growth, Colombia’s infrastructure needs present numerous opportunities for both local and international investors.
There are several ongoing infrastructure projects that will likely trigger M&A activity, particularly in the form of public-private partnerships (PPPs) and joint ventures between local and foreign construction firms. Key projects are focused on the construction and rehabilitation of highways, toll roads, and bridges, with financing from both the private and public sectors. Colombian infrastructure companies, in particular, are looking for partnerships to scale up their operations, which will open the door for strategic acquisitions by larger international firms. Investors with expertise in infrastructure development and management will find ample opportunities to capitalise on this sector's growth.
Additionally, the Colombian government’s emphasis on sustainable infrastructure – especially in terms of reducing carbon footprints – could attract companies involved in green building and environmentally friendly technologies. This is likely to drive M&A activity in the renewable energy and environmental services sectors, further diversifying the opportunities in Colombia’s infrastructure space.
The Scotiabank-Davivienda consolidation: a financial market shake-up
One of the most high-profile M&A events to have already taken place is the consolidation between Scotiabank and Banco Davivienda, two major players in the Colombian and Latin American banking market. This merger has created a new powerhouse in Colombia’s financial sector, consolidating market share and introducing new opportunities for both retail and corporate banking. As we look forward to 2025, this consolidation is expected to have a ripple effect, not only in Colombia but throughout Latin America.
In response to this merger, it is anticipated that other players in the financial sector will reconsider their strategies. Larger regional banks might look to diversify their portfolios and mitigate country-specific risk by expanding into new Latin American markets, particularly in the Andean region and Central America. This could lead to increased cross-border M&A activity as financial institutions seek to strengthen their positions in a rapidly changing market.
Moreover, the financial consolidation could also lead to a period of reorganisation within Colombia’s banking sector. Smaller banks, in particular, might find themselves facing greater competition from the newly-formed Scotiabank-Davivienda entity. This could trigger a wave of strategic acquisitions or partnerships as smaller banks seek to bolster their competitive position, offering opportunities for larger institutions to enter the market or expand their presence.
The impact of Trump on M&A in Colombia and Latin America
The political landscape in the United States, particularly with regard to President Donald Trump’s economic policies, will continue to influence Latin American markets in 2025. While Trump’s return to the political scene could add some volatility to US relations with Latin America, his approach to trade and tariffs has already had a significant impact on M&A activity across the region, including Colombia.
Trump’s emphasis on protectionist policies and “America First” rhetoric had the effect of driving Latin American companies to seek alternative markets for investment, trade and strategic partnerships. This dynamic continues to shape the M&A environment in Colombia, where businesses are increasingly looking to strengthen ties with the USA and align with American trade priorities.
Additionally, Colombia’s agricultural and manufacturing sectors may see heightened interest from American investors seeking to diversify supply chains and reduce dependency on China. As part of the broader trend of reshoring and nearshoring, the market expects to see a rise in M&A deals in these sectors as companies take advantage of the opportunities arising from the shift in global trade patterns.
This trend may drive a wave of M&A activity in Colombia’s manufacturing and logistics sectors, with US companies investing in Colombian subsidiaries or forming joint ventures to take advantage of Colombia’s strategic location. Additionally, as the USA tightens trade relations with China, Colombia may become an increasingly important part of the Americas’ supply chain network.
However, US pressure on drug trafficking could introduce regulatory challenges in some sectors, particularly in agriculture and natural resources. The Colombian government’s ability to balance economic development with US demand for anti-drug policies will be crucial in ensuring continued foreign investment.
Conclusion
As we look ahead to 2025, the M&A landscape in Colombia will be shaped by a range of factors, from political stabilisation to the evolving influence of global economic powers. While risks remain, particularly with regard to global geopolitical uncertainties, the country’s market is increasingly being seen as a stable and attractive environment for investment. The convergence of factors such as infrastructure development, financial sector consolidation, geopolitical shifts and international trade dynamics will contribute to an active and increasingly competitive M&A market. Investors and businesses operating in Colombia will need to remain agile and well-informed in order to capitalise on the opportunities that arise in this rapidly changing environment.