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Juan Esteban Calle Restrepo, ’94, heads Medellín-based EPM, the largest public multi-utility company in Colombia. Calle recently discussed the economic prospects for Colombia and Latin America with Santiago Umaschi, ’11, managing partner of a Boston-based strategy consulting firm that specializes in international markets. Umaschi works with a nonprofit arm of EPM that helps small and midsize companies in Medellín find export markets. Umaschi reached out to Calle on a visit earlier this year—the two met for the first time over coffee, and talked about the city’s prospects. They continued the conversation in a summer phone call.

Umaschi: I commute from Boston to Medellín from Boston twice a month, and I find the geography to be striking. With the Andes all around you, you’re surrounded by a wall of green. At first I was a little claustrophobic, but then the city grows on you. The people are proud of their city. The metro cannot be cleaner. If you call the car service for a 5 a.m. pickup, the driver is there 10 minutes early.

Calle: Medellín is known for its people. They are welcoming and hard working. We’re the second-largest city in Colombia and ranked as one of the top 20 cities for doing business in Latin America. We lived through hard times, but now we’re recognized as a city that transformed itself, moved from fear to hope.

Umaschi: How exactly did that transformation take place?

Calle: During the 1980s and early 1990s, the drug cartels were trying to co-opt not only the city, but also Colombian society. At that time, the local leaders and the private sector, alongside churches, universities, and other institutions, came together through a social pact to protect the city and its institutions from the drug cartels, from violence and corruption. During the last 15 years, the city has invested by building libraries, community centers, and mass transit in the most depressed communities. We introduced an electricity system in which consumers pay in advance for their power. That program has 185,000 customers and it enables them to better manage their usage.

Umaschi: I understand that if an EPM utility maintenance crew sees a farmer walking on the side of the road, they’re expected to stop and take him to where he needs to go. In some ways, EPM’s internal policies helped stabilize the situation in Medellín, too, it seems.

Yes, since its start in 1955, the company has been a value to the communities. Our clients, our customers—who are at the same time our owners—love the company. So they pay their utility bills before paying anything else in their households. We collect 99 cents out of every dollar we bill our clients.

“Many smaller companies have difficulty getting access to capital and finding and retaining professional management.”

— Santiago Umaschi

Umaschi: It’s plain to see how the city’s hard work has paid off. As I’ve tried to help Medellín-based companies expand internationally, I’ve found some amazing businesses. One manufacturer makes hospital beds—they require a lot of electronics—and is competitive worldwide. Yet I find many smaller companies have difficulty getting access to capital and finding and retaining professional management. Some are fearful about expansion outside Colombia. Why do you think that is?

Calle: The ports are a bit far from our city. The reality is that our economy was closed until the 1990s, so most companies focused on serving the local market. We still have some traces of that culture in our younger generations. But change is happening. Since the economy has opened up, some local companies have begun expanding—not only exporting, but investing abroad.

Umaschi: There’s also the problem of infrastructure. The distance between Medellín and Bogotá is roughly the same as Boston to New York. Many times, I drive early in the morning to New York, have a few meetings, and come home that same night. It takes about three and a half hours. But to go from Medellín to Bogotá driving, it’s about eight hours.

Calle: Columbia needs to continue investing in infrastructure—the government has made this a priority. Investment in national toll roads will exceed $20 billion over the next five years.

Umaschi: You’re not just invested in Colombia, right?

Calle: EPM began its international expansion in 2010. Today we have a presence in Mexico, Guatemala, El Salvador, Panama, and Chile. We’re trying to enter the Peruvian and Brazilian markets. We like Latin America in general. We are fully aware that in 2015, the economies of the region are slowing down. It is a fact. And they may continue to do so in 2016. But midterm and long-term, we are bullish.

Umaschi: There are a lot of opportunities.

“We are still not the most transparent continent in the world, but society in general is interested in moving forward and fighting corruption.”

— Juan Esteban Calle

Calle: What we like most about the region is that it has a young population. We like to enter markets where most of the people are young since they will be the engines of growth. Also, Latin America has a growing middle class and commitment to investing in infrastructure and education. We are still not the most transparent continent in the world, but society in general is interested in moving forward and fighting corruption.

Umaschi: We also are bullish on the region, but not on every country. That, perhaps surprisingly, is what compels us most about what’s happening in Latin America. For decades, all of Latin America did well or all of Latin America did poorly. Now we see that because of political reasons and differences in each place, the countries have to be evaluated independently. That means they own a little more sovereignty into how their policies work—because if as a country you are being responsible and doing things right, you stand out. Differentiation is great for the region.

Calle: As you say, there are a lot of opportunities.

Umaschi: We hear a lot of big private-equity funds are setting up shop in Latin America, but not venture capital funds. That’s a mistake: I don’t see a clear exit strategy for those funds because the capital markets are not well developed. Better to find the promising companies and invest in them at a Latin American valuation, help them expand into the United States, and then exit at a US valuation. That would be a great opportunity. Unfortunately, we don’t see a lot of that happening.

Calle: Oh, yes, I agree with you. There are great opportunities for venture capital in the region. Nowadays, we have promising local ventures in Brazil, Peru, Chile, and Mexico, all with potential to expand to the United States and other G7 markets. Colombia, of course, represents a new market with potential and very few players, so it’s an attractive country for investment.

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