Canadian Pension Giant Makes Its First Foray Into Colombian Private Equity

The C$539 billion ($431.7 billion) Canada Pension Plan Investment Board has invested $334 million to acquire a 19.3% stake in Colombia-based discount grocery store chain D1, formerly known as Koba Colombia. The deal marks the pension giant’s first direct private equity investment in the country.

D1, which first opened for business in 2009 and officially took on its new name last month, recently announced it has become Colombia’s main food retailer. Citing findings from Nielsen, the company said it had a 9.7% share in the retail market and a 74% share in the so-called “hard discount” sector at the end of 2021. D1 has over 2,000 stores and reported 2021 operating income of more than $10.9 billion, which was a 32% increase from 2020. It also said this year.

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Hard discounters differ from the traditional, large supermarket in that the limited variety of products they sell—often in small, no-frills stores—are affordable, quality, mainly private-label items.

“D1 provides an excellent opportunity to capitalize on the behavioral shift occurring in Latin America’s food retail space, where consumers are adopting new ways of shopping that prioritize convenience and price,” Tania Chocolat, CPPIB’s head of active equities Latin America said in a statement.

GDP in Colombia is projected to grow 6.1% this year and 2.1% in 2023, according to the Organization for Economic Co-operation and Development. The OECD also said moderate growth will resume this year for the country, with a slight acceleration through next year. It added that private consumption “will gather steam” in 2023 as high inflation and unemployment recedes.

“Latin America is a region where several industries are undergoing rapid transformation, and Colombia is among the markets we’ve identified as particularly fertile for growth,” Chocolat said. “Our investment in D1 supports our goal of identifying standout companies in the region that are well-positioned to deliver strong long-term, risk-adjusted returns for the CPP Fund.”