October 26, 2015
Interviewed by: David Snow
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What Victoria Capital Saw in Colombia’s Corona

Victoria Capital co-managing partner and chairman Carlos Garcia says that, despite the economic downturn that has plagued Latin American countries in the past year, the climate actually helped one of the firm’s portfolio companies turn a profit in the past fiscal year.

Victoria Capital co-managing partner and chairman Carlos Garcia says that, despite the economic downturn that has plagued Latin American countries in the past year, the climate actually helped one of the firm’s portfolio companies turn a profit in the past fiscal year.

What Victoria Capital Saw in Colombia’s Corona
With Carlos Garcia of Victoria Capital

David Snow, Privcap: Carlos, could you mention a deal your firm had done recently that maybe is a good example of opportunities that are arising in the current environment?

Carlos Garcia, Victoria Capital: We invested about a year ago in a company called Corona, which is one of the largest building materials producers in Colombia. It manufactures sanitary wear, floor and wall tiles, paint, faucets, and other related building products. It is a company operating in Colombia, with operations in Colombia, Central America and the U.S. And interesting enough, what we saw there wasthe vast majority of [this company’s] products go to the refurbishing market, not so much to the new home territory. As a result of that, we have seen that, when you look at the consumer pattern, first they satisfy their basic needs: food. Then, they go to elevating the scale of these needs that they need to satisfy: education and healthcare.

Now, they get to an area where they want to gratify themselves and have better homes. Interesting enough, in a cyclical downturn you would expect that building materials would go downward. But it’s quite the opposite—we are seeing a phenomenal trend toward people spending in order to feel better about their homes. That’s an interesting case that we have to report.

Snow: Has the currency fluctuation changed the operations of that business?

Garcia: Interesting enough, for the good. Because Colombia is a very open economy and in the low side of the price spectrum of the product, we were facing the competition of Chinese product. The Colombian currency has devalued sharply over the last year—it’s probably the worstperforming currency together with the rial in Latin America. And that has pretty much shut off the foreign competition into Colombia. So, we have benefitted, if you want, from less competition in the market. Obviously, we have not been able yet to recover the full impact of the valuation in our prices. But, clearly, we are making it up through larger volumes, and the company continues to perform extraordinarily well.

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