Colombia - The Gilinski factor could shake up Colombia’s crypto regulatory sandbox
A hostile takeover targeting Colombia’s largest bank could change the course of the government’s crypto regulations.
Bancolombia-Gemini is one of the main pairs in Colombia’s crypto regulation sandbox and a key partnership for building out Colombia’s blockchain infrastructure. Simultaneously, there is a hostile takeover targeting Bancolombia that could impact Bancolombia’s role in shaping crypto regulations.
Bancolombia is part of a business conglomerate called Grupo Empresarial de Antioquia (GEA), which is the target of a takeover attempt by Colombian Billionaire Jaime Gilinski and the Abu Dhabi Royal Family. Offers to take GEA companies private from the public markets began in November 2021 and have been ongoing since then.
What is interesting is that before Gilinski began bidding for GEA companies, he quietly set up a fintech called Lulo Bank in Colombia. Lulo Bank is primarily owned by Jaime Gilinski and some minority investors. It is managed by his son Benjamin.
According to Bogotá financial sector sources, Lulo Bank's corporate lawyer Juan Sebastian Paredo Bernal is a smart, respected and close to the SFC regulator. Lulo Bank is interesting because it is set up to compete with Nubank and Rappi Pay, both of which are moving into crypto-based payments for their customer base. So far, however, Lulo lacks the infrastructure and the market. It's literally just a Fintech license swimming around Colombia’s banking market.
Bancolombia, on the other hand, does have the financial infrastructure, compliance, AML and Latin America market. The Abu Dhabi fund that just made an offering for that Nutresa stake now also owns 25% of Lulo Bank. That private transaction likely happened quietly as Gilinski gained vision on the chances of taking over Bancolombia.
Here is one possibility for how this scenario could play out. Step 1: Execute hostile takeover of the Nutresa and Sura boards. Control Argos via the first two boards and then via Argos Gilinski controls Bancolombia. Step 2: De-couple the companies by selling Nutresa's shares in Sura/Argos, Sura's shares in its sister companies, etcetera. Step 3: Use Lulo as a vehicle to acquire Bancolombia or use Bancolombia to acquire Lulo with the Fintech licenses already acquired.
However Gilinski and Abu Dhabi expect to perform an eventual fusion, it seems that the end game here is to build a Latin America Fintech through control of Bancolombia. Abu Dhabi is primarily understood to be involved in the deall for Nutresa and food security interests, but with the 25% stake in Lulo, it appears they are interested in the Fintech exposure too.
If Gilinski can pull off the full takeover, it will mean that control of Bancolombia falls into his hands. There is no doubt that Gilinski and Abu Dhabi group will push for a body of accommodating crypto regulation in Colombia through its relationship with Colombia’s securities regulator (SFC) and Jorge Castaño.
The question then becomes: how, if at all, Bancolombia will re-consider its stance on blockchain infrastructure? It remains to be seen whether Bancolombia adopts Lightning Network payment architecture or moves toward an Ethereum-first model. Wherever Bancolombia throws its weight, others in Colombia and Latin America finance will be sure to notice.