Gilinski Sees Global Future for Nutresa in Abu Dhabi Partnership

(Bloomberg) -- Jaime Gilinski, one of Colombia’s richest men, spoke with Bloomberg on Nov. 20 about his proposed takeover of food maker Grupo Nutresa SA. What follows is a transcript that has been shortened and edited for clarity. 

What’s next in the process? 

We have approval from the superintendency of banks and the stock exchange. We are publishing the information in major newspapers. That means that the bid process starts, and we will have until the 17th of December, that’s the date it ends and that we expect at that point to know what percentage and how many shares have been tendered. The process starts on Monday.

How do you plan to present your offer to shareholders?

Officially, we can only start now that the offer has been approved. We are very positive. Our bid is in dollars, it’s $7.71 per share. It’s a premium of close to 38%. We believe that’s a very good premium. The stakeholders -- the Grupo Empresarial Antioqueno, the minority shareholders, and the pension funds -- are going to analyze it now in a very serious way. The fiduciary responsibility of the board members of the companies, and also the administrators of the pension funds who have to report to millions of people who have their savings with them, they really have to take this bid as a very serious premium to where the market was at the time that we made the offer. 

Do you plan to meet with them?

I don’t know where anybody stands. One of the things that I’m going to do starting on Monday, now that we are approved, is to meet with the different stakeholders, if possible. I’m going to try to really explain that this is a very good deal for shareholders. When we look at the shares of Nutresa, over the last 10 years the shares have come down in excess of 50% in U.S. dollars. The shareholders of the company -- even though these are excellent companies and very well-run companies, and I have said that, and I will say publicly that I respect very highly the CEO of Nutresa and the management team -- the market has not reflected that in terms of value. Usually premiums of these type of deals average in the range of 30%, this one is close to 40%. So we believe that everybody has to take it very seriously, specifically in the case of Proteccion. The administrators of Proteccion have a fiduciary duty to the pensioners - same as the other four pension funds in Colombia. I will try to approach all of them in the course of the next few days. 

Why cap the offer at 62.6%?

The requirement is that if you make a bid, the minimum number of shares that you want to acquire, you have to allow the market to have an excess of 25% over that if people would like to tender more shares. So, because of the fact that we bid for 50.1% mathematically that excess 25% really goes to 62.6%. 

What plans do you have for Nutresa should your offer be accepted?

Nutresa is a 102-year-old company. It’s a company that is very well managed, has excellent brands, has very good innovation in terms of their food products, and has market-share leadership in the countries where it operates. It’s one of the largest food-processing companies in Latin America. The market has not reflected what we believe is the value of the company and that’s why we are offering a premium of close to 40%. 

Hopefully I’m able to convince the management team and the CEO to continue with us, because our interest is to grow the company, to continue being a company that helps and really supports all of the social-responsibility activities that they have maintained in Medellin and in the state of Antioquia, where it is based. We will continue supporting all of the activities in sustainability and all of the work that they have done on environmental issues. It’s a company that we respect. It’s a management team that we respect. And with the partners that I’m coming with, which is the group from Abu Dhabi, we are going to be able to provide Nutresa with the opportunity to expand into areas of the world where they haven’t been. Nutresa’s products are excellent, they are well-priced, and are brands that are very recognized, and can be transported to other places of the world, especially the countries near Abu Dhabi, which have a major population. 

How did your partnership with Abu Dhabi’s royal family come about? 

Since almost 2005, that’s about 15 years, I have been traveling and meeting and building relationships with that part of the world. Most of those relationships are built over time, and with a lot of trust. We have a large project in Panama in which we are partners with a major sovereign wealth fund. With Abu Dhabi, we’ve built this relationship. They have a very keen interest to grow in Colombia, to grow in Latin America. And we have decided to be partners for the long term. Nutresa really is the first of hopefully many investments together. They have identified in our family that we are a group that has the strength, the experience -- I’ve been working for the last 43 years in the region – we have the contacts, the connections. Nutresa as an investment, not only has all the potential to continue to be a great company but we can make it go from a Latin American company into what I would say becomes a global company. 

What other sectors do you envision pursuing in this partnership? 

We are going to really concentrate on Nutresa. We have to first crawl, and then walk and then run. That has been the philosophy of my life. It’s for me a large partnership, I have a big responsibility to be successful, initially with the bid. Once you win, that’s when the work starts. I want to be sure that in the next year or two it’s made into a much better company, and that our partners feel that we have a good management team to move forward. 

In the meantime, we will continue looking at other opportunities. I know from my conversations and many conversations and many trips that I’ve made, that they have a very strong interest in Latin America and a very strong interest in Colombia. And we will start with this investment and hopefully over the years there will be many more.

At as much as $2.2 billion, how would the Nutresa acquisition compare to others that you’ve made?

This would be the largest acquisition that we have made. This values the company at around $3.6 billion. It’s a large acquisition but it allows us to really take a stake in what we believe is a strategic asset going forward. Food is something that will continue to be needed all over the world. And if we have good brands and good products and good innovation, I believe long-term this could be an interesting opportunity for me, for my partners and for whoever is a shareholder.

Beyond this acquisition, what else are you focused on?

Our group is a private group. My grandfather came to Colombia in 1927. I’m really third generation, my children are fourth generation, my grandchildren are fifth. We are a group that started in industry. When I came to Colombia in the 1980s, after my MBA at Harvard Business School and some time in New York, we started to build relationships with major multinational companies, mostly U.S. companies. We had a joint venture with Cooper Industries, a joint venture with Procter & Gamble. 

The group is also involved in banking. I started in 1980, my father had a small finance company. Then in 1991, we bought the BCCI branches. We turned them around. In 1994 we acquired Banco de Colombia, which was the largest privatization at that time in the country. It was the largest bank in the country. I came into that transaction with 87 major institutional investors, which was the first time they came to invest in Colombia. And then we continued growing. We acquired Banco Sudameris. We have built that from a $400 million asset base in 2003 to close to about $14 billion today, mostly through acquisitions and really developing a strategy of growing in the region. We have acquired in the process two banks in Colombia, trust companies, two brokerage companies, then in 2013 the HSBC operations in Colombia, Paraguay and Peru, and recently the BBVA operation in Paraguay. We have built a very interesting regional bank based in four countries. 

We also have properties. We were partners in Panama on a very large-scale real estate project, called Panama Pacifico, with an English group, London & Regional. We started there also with a privatization in 2007, and today it’s one of the largest projects in the country. We have over 15,000 people already working on the site and over 300 companies leasing space. So, it’s really an interesting diversity of our businesses. 

The family was also from the beginning involved in industry. My father started a snack food company, which is today the second-largest after Frito-Lay in our region. The family has also a plastics company. We have diversified. We have the Four Seasons hotels in Colombia. I’m an investor at Metro Bank in England. So, we are diversified, but our core business has been banking. And I think this transaction with Nutresa, which is a very large transaction -- as I said, the largest we have ever done-- with the partners that we have, and with the strength of the company, it gives me all the confidence that we’re on the right track.

Is part of your bid for Nutresa aimed at bringing more liquidity to the Colombian markets? 

The structure that exists of cross holdings – and you can talk to any of the large institutional investors -- has not allowed the market to really understand and weigh the value for these assets because it’s really involving too many things. And the cross holdings eliminate somehow part of the liquidity. It is in our interest to hopefully buy the control of the company and use the capital markets to continue growing. I have had a very good relationship with international investors. Today, there’s an opportunity. If the strategy works and we can build this into a globalized company, we should be able to see some improvement in value of the company and liquidity.

Are any investment banks advising you?

I have some investment bankers that have worked with me in the past. I’ve been working on this for almost two years. It’s not something that happened just overnight. I have a tendency to be very, very focused on details. I do a lot of research. I really understand and tried to understand that this was the right company, the right structure. I know that I was facing it on a complex shareholding structure. And I believe that with the offer we have made and with the interest that we have, we will be successful. 

A lot of the major investment banks were not able to work with us because of one conflict or another. So I decided to build my own investment bank with people who have retired and people that I trust. And I’m also an investment banker by training. I started at Morgan Stanley in 1980 in this business. So, I have been 43 years doing this. 

What’s your outlook for Colombia? 

We have had two very hard years all over the world. And I think that, especially in Colombia, the pandemic and Covid created a lot of disruption. The fact we are investing in Colombia and that we are doing this transaction at this moment, which is a hard moment for the country, is not only a sign of confidence of our family in the country, which we have always had since my grandfather arrived in 1927, but it’s a sign of confidence that we are bringing a major world investor to Colombia. I believe we will be successful. This transaction has taken a lot of time to understand and to build. And if successful, it will be a breakthrough in the capital markets of Colombia to allow a change which is needed. The shareholders of Nutresa today, especially the minority and the pension funds, will be able to realize this year a return that they had not seen over the last 10 years. 

I believe in Colombia. I’m an optimist in Colombia and I’m also a contrarian. All my life, I have made my investments at times when other people believed that it was not the right time. And I think today the capital markets in Colombia are a good value. We are making an offer that’s fair. We will continue doing things in Colombia. It is in my interest and the interest of my partners to make more investments. It’s a country of 50 million people. It’s a country of great people. It’s a country that I think has a tremendous future. 

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