The last Latin market to 'emerge'
Ecuador is on hardly anyone's radar screen. Perhaps it should be. This country, bypassed by the train of economic liberalisation that has swept through much of Latin America, is the last Latin market to 'emerge'.
Recently, the central bank has been sponsoring investment and promotion conferences in the US. Sponsored supplements have also been placed in financial trade magazines and newspapers. Ecuador has a couple of DR programmes (with Citibank) and, when the market comes around, it is ready to offer a few more.
According to Gregg Krowitz, vice president of Bankers Trust's ADR department which co-sponsored a conference in Guayaquil in August of this year, 'Under the Duran administration, Ecuador has embarked on profound reforms to liberalise and stabilise the economy. These reforms are now being recognised by international investors. With virtually no limitations on foreign investment, Ecuador is now anticipating that several issuers, initially in the banking sector, will establish ADR programmes in the near future.'
When President Sixto Duran Ballen was voted into office three years ago, he inherited a dangerously bloated public sector and an ailing economy. Since then, Duran Ballen has chipped away at the bureaucracy and inflation while encouraging foreign investment. Wall Street insiders believe this bodes well for ADR development. Watch for more in coming months.
Meanwhile, the Ecuadoran government has approved a bill that will allow the sale of a 35 per cent stake in the national telecom company Emetel. The company has been valued at around $2.2 bn and the government is expecting bids from foreign strategic institutional investors. Additionally, international equity investors are likely to be given the opportunity to purchase shares.
Although the sale has only recently been approved, foreign interest is expected to be strong. Emetel has enormous potential for growth: the country only has five phone lines for every 100 people, less than 50 per cent of the level of penetration elsewhere in Latin America.