Valorem S.A.

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Valorem S.A.

93-68 Carrera 14
Santa Fe de Bogotá, D.C.
Telephone: (57 1) 617-2000
Web site:

Public Company
Incorporated: 1997 as Valores Bavaria S.A.
Employees: 48
Sales: COP 88.51 billion ($37.52 million)
Stock Exchanges: Bolsa de Comercio de Colombia (Bogotá)
Ticker Symbol: VALBAVARIA
NAIC: 551112 Offices of Other Holding Companies

Valorem S.A. is the holding company for Colombias Santo Domingo family, whose patriarch is Julio Mario Santo Domingo Pumarejo, the nations wealthiest individual. Grupo Santo Domingo, as it is often called, developed from a virtual monopoly on beer production and sales in Colombia to become a conglomerate with vast influence on the economic and political life of the nation. Under the name Valores Bavaria S.A., and more recently Valorem S.A., it has had to sell many of its properties. Restored to financial health, the familycontrolled conglomerate keeps a lower profile and, although the enterprise is technically public, it functions much like a diversified private equity fund.


Mario Santo Domingo, a banker in Barranquilla, the largest city on Colombias Caribbean coast, established the family fortune by purchasing financially troubled breweries in his home town during the Great Depression, then slowly consolidating them with similar acquisitions until he was able to merge his interests with Bavaria S.A. in 1967 and make his group Colombias leading brewer. Also, in the 1950s, he acquired other industrial interests in collaboration with foreign capital, including, in 1959, a partnership with Reynolds Metals Co. that resulted in Aluminio Reynolds Santo Domingo S.A.

Mario Santo Domingo died in 1973 and was succeeded as head of the group by his son Julio Mario, who established a virtual monopoly on beer production and distribution in Colombia and Ecuador by acquiring other breweries. During the 1970s and 1980s, the organization that journalists called Grupo Santo Domingo became a web of enterprises in numerous other fields, including air transport, banking, insurance, petrochemicals, and food processing as well as metals, using cash proceeds from Bavarias beer monopoly. Another enterprise that, in the mid-1980s, came under the groups control was Cadena Radial Colombiana S.A., the nations leading radio network, known by the acronym of Caracol (Spanish for snail). Some of these enterprises issued stock that was publicly traded, but Grupo Santo Domingo held the controlling interest. By 1992 the group controlled more than 80 companies with combined annual revenue of more than $2 billion, and Julio Mario Santo Domingo was a billionaire. In 1994 the group assumed majority control of Avianca Aerovías Nacionales de Colombia S.A. (Avianca), the nations chief airline.

Colombias richest man was a jet-setter, with residences in his native Barranquilla, as well as in Bogotá, New York, and Paris. (Santo Domingo was, like his father, born in Panama.) He was prominent in international society, appeared on lists of the worlds best-dressed men, collected art, gave generously to charitable causes, and was Colombias first ambassador to mainland China. However, he spent most of his time in New York, far from the interminable warfare between left-wing guerrillas and right-wing paramilitary forces, the violence of drug traffickers, and the constant threat to the rich of kidnapping for ransom. Others affiliated with the group were not so fortunate. In a 1992 Forbes article, Joel Millman wrote that Santo Domingo watched helplessly as Colombias cocaine barons and Marxist guerrillas kidnapped and murdered his employees, bombed his oil wells and shot down his helicopters. According to Millman, all aboard an Avianca flight from Bogotá died in 1989 as the result of a bomb planted by a passenger who bought his ticket under the name Julio Mario Santo Domingo.

Although Santo Domingo was usually abroad, his group was in the capable hands of Augusto López Valencia, its president since 1985. He was said to know more about Grupo Santo Domingos myriad companies than even their presidents. An untiring taskmaster, López Valencia generally worked 15-hour days. In Latin Trade, Adam Thomson wrote, in describing López Valencia, His piercing gaze betrays a lucidity and resolve that at times seems to border on the visionary. Linked to Santo Domingo by the latest in teleconferencing technology, as well as by telephone, he conferred with his boss as often as four times a day.


The groups holdings spread far and wide by 1998. They included, besides majority holdings of Bavaria and Avianca, majority control of Sociedad de Fabricación de Automotores S.A. (Sofasa), a joint venture established with Renault S.A. and Toyota Motor Co. in 1994 to produce and distribute automobiles in Colombia. There was a construction company, an insurance firm, a financial corporation, an employment agency for temporary workers, and a security serviceeven fishing and forestry companies. A joint venture with French supermarket operator Carrefour S.A. had been established to open retail outlets in Colombia.

López Valencias aggressive acquisition program for Grupo Santo Domingo was centered on media and communications. The keystone was Caracol, which, together with the network owned by rival tycoon Carlos Ardila Lülle, Radio Cadena Nacional S.A. (RCN), controlled nearly half of Colombias radio stations. After taking on Grupo Prisa, a big Spanish media group, as a minority partner, in 1990, it expanded abroad, with a 62 station radio network in Chile and individual stations in Paris and Miami. The groups cellular telephone company, Celumóvil S.A., had a significant share of its market. Grupo Santo Domingo became, in 1997, one of four partners in an alliance offering direct-to-home satellite television throughout Colombia. The group also took a quarter-share of Orbitel S.A., a company recently given the right to enter into competition with the state owned long distance telephone carrier. To help pay for these investments, the conglomerate sold its majority stake in Banco Comercio Antioquia S.A. for $141 million and a credit company, Invercredito S.A., for $93 million.


Mario Santo Domingo gains control of Bavaria S.A., Colombias biggest brewer.
The group takes control of Colombias largest radio broadcasting network.
The Santo Domingo group controls companies with annual revenue of over $2 billion.
The group forms an auto manufacturing joint venture with Toyota and Renault.
The groups Caracol Televisión S.A. is now a nationwide broadcasting network.
All non-beverage companies are placed in Valores Bavaria S.A., a holding company.
Deficit ridden Valores Bavaria loses $370 million during a national recession.
Valores Bavaria is renamed Valorem, S.A.
Valorem sheds its half stake in bankrupt Avianca, Colombias leading airline.

When the government finally, in 1997, granted private enterprise the right to operate two television channels to compete with two existing state run channels, Grupo Santo Domingo won one of the two, paying a license fee of $95 million. (Ardilas group won the other one.) However, Caracol Televisión S.A. had been in operation since 1967, acting as a production company for the two existing channels. It churned out some of the telenovelas (serial dramas) so popular in Latin America. Once on the airwaves, Caracol (70 percent owned by Grupo Santo Domingo) immediately vaulted to first place on the strength of its soccer coverage. Caracol also broadcast three telenovelas each day and was exporting some of its telenovelas to Spanish-speaking viewers in other countries.

The group also had publishing holdings in the form of the weekly magazine Cromos and Colombias oldest and second largest daily newspaper, Bogotás El Espectador. Cromos, dating from 1916, was the nations oldest magazine and ranked second in circulation among weeklies. El Espectador, which once employed the future Nobel Prize novelist Gabriel García Márquez, had survived the murder of its editor and a massive bomb explosion, both presumably at the hands of drug traffickers angered by the papers investigative journalism. This purchase could not be justified by commercial standards, but the print media were considered useful for other reasons. The group was eager to see Horacio Serpa, the Liberal Party candidate for president in 1998, succeed fellow Liberal Ernesto Samper, with whom it enjoyed a close relationship that was likely based, in part, on Santo Domingos generous financial contribution, which may have been as much as COP 1.5 billion (about $1.8 million), to Sampers own election four years earlier. The newspaper and weekly magazine acquisition provided a print counterpart to the groups Caracol radio and television channels, which were already promoting Serpas election. According to the business magazine AméricaEconomía, the television channels World Cup soccer coverage included harangues against opposition candidate Andrés Pastrana, who had run unsuccessfully against Samper in 1994. When Pastrana nonetheless won the presidency in 1998, the group lost what had been unprecedented access to the presidential mansion.

In January 1998 the Santo Domingo group was officially named Grupo Empresarial Bavaria and its 129 companies were reorganized into two public holding companies: Bavaria S.A., a beverage unit, and Valores Bavaria S.A., a grab bag of all the others. Despite the wide extent of its activities, the latter accounted for only one-third of the combined groups assets and was seen by financial analysts and investors as the weaker of the two units. Colombia had fallen into its worst economic recession in 70 years, and Valores Bavaria, despite assets of $2.7 billion, lost about $120 million in 1998 and $220 million in 1999. By the end of the year, López Valenciawho had not long before been chosen man of the year by the weekly magazine Semana had stepped down as head of the group.


Grupo Empresarial Bavarias new chief, a nephew of Santo Domingo, began shedding assets. Valores Bavarias majority stake in the insurance company Compañia Colombia de Seguros S.A. was sold in 1999, and the diversified holding company also exited the pension fund field. Its one-third share in Celumóvil was purchased by BellSouth Corporation in 2000 for $295 million. The nephew was soon out of his job at the head of the company, but Santo Domingo had little confidence in his eldest son, who Hugo Sabogal of AméricaEconomía described as distinguished more by his parties and beautiful European and American girlfriends than by his ideas. The groups patriarch first turned to an 82-year-old friend, then appointed an unrelated Colombian as chief executive. The latter gave way to a Spaniard, Javier Aguirre, in late 2001. Valores Bavaria lost about $370 million that year.

In an effort to halt the hemorrhaging, Aguirre sold a hamburger chain and dealt majority control of Caracol radio to the Prisa group. (It sold its remaining 17 percent stake to Prisa in 2004.) El Espectadors losses could no longer be ignored, so it was restricted to publishing on Sundays. The only bright spot seemed to be Caracol Televisión. It scored an international success with the telenovela Pedro el Escamoso and signed a fiveyear agreement with Telemundo, the second largest Spanish-language network in the United States, to supply two long running telenovelas each year. Late in 2002, Valores Bavaria sold its majority share in Sofasa for an undisclosed price. The company announced plans to dispose of noncore assets so that it could concentrate on media and communications.

Valores Bavaria, in 2003, sold its 35 percent share of the Grandes Suiperficies de Colombia supermarket chain to its joint venture partner, Carrefour. The following year the company changed its name to Valorem S.A. and sold Finca S.A., a large animal feed operation. In 2005 Valorem sold its quarter-share of Orbitel. Also that year, it finally disposed of its remaining half-stake in Avianca, which had drained the groups resources and had fallen into Chapter 11 bankruptcy protection in the United States, selling it to the Brazilian conglomerate Synergy for $63 million. The holding company had invested $400 million in Avianca in recent years. Valorem also made a major acquisition that year, purchasing a quarter-share in Compañia Electrica de Sochagota, a coal firing power plant. In 2006, however, Valorem sold TV Cable to Mexican billionaire Carlos Slims Teléfonos de México, S.A.C.V. for about $180 million. TV Cable was offering subscription television and Internet services to homes in Bogotá and Cali. It also sold Helicopteros Nacionales de Colombia S.A. (Helicol) to a Brazilian businessman for an undisclosed sum. Helicol had debts of $220 million.

With 2006 operating incomewhich consisted essentially of income from its investmentsof only COP 88.51 billion ($37.52 million), Valorem seemed to have fallen to the status of a minor company, and a struggling one at that. Its net loss of COL 81.44 million ($34.52 million) was almost as large as its operating income. However, Valorems total assets came to a considerable COL $1.57 trillion ($663.83 million) and its total equity (assets less liabilities) to COL 731.08 billion ($309.90 million). Caracol Television was still Colombias leading network, and Valorem still controlled it, although it held only 23 percent of the shares. Aluminio Reynolds Santo Domingo was still in existence, and another important holding, petrochemical company Polipropelino del Caribe S.A., had annual revenue of about $400 million.

Valorem earned a profit in the first quarter of 2007. Its assets, besides the aforementioned companies, included control of Biofilm S.A. and technology firm Red Colombia S.A. It announced in late 2006 that it planned to sell one billion new shares worth about COP 473 billion (about $206 million) to strengthen its control of Caracol Televisión and the other four companies. It also had stakes in about 15 other companies, including foreign ones such as Canal America, a Peruvian television broadcaster.

Shortly after the sale of Bavaria S.A. in 2005 to SABMiller plc, the estimate by Forbes of Julio Mario Santo Domingos net worth swelled from $1.4 billion to $4.5 billion, indicating ample funds available to familycontrolled Valorem. A year later, Forbes estimated the fortune of the Santo Domingo family at $5.7 billion. At 83, the dapper Santo Domingo was still appearing in the society pages of New York newspapers. He also attended and addressed the annual meeting of SABMiller (in which the family held 15 percent of the shares and named two board members). A supporter of Colombian President Álvaro Uribe, who had recently been reelected, Santo Domingo urged the adoption of a constitutional amendment that would allow Uribe to run for a third term. Alejandro Santo Domingo Dávila, a 30-year-old son by his second marriage and an SABMiller board member, had been anointed his successor, according to Matthew Goodman of the Sunday edition of the Times (London). Goodman said that the Santo Domingo clan was based in New York and had an office on New Yorks Park Avenue where its wealth was controlled and invested. A biographical database listed Alejandro Santo Domingo as director of Quadrant Capital Advisors Inc., located at 499 Park Avenue.

Robert Halasz


Organización Ardila Lülle.


Goodman, Matthew, Colombia Beer Battle Brewing, Sunday Times (London), May 13, 2007, Bus. Sec., p. 12.

Lannert, John, The Two Who Rule, Billboard, September 14, 1998, p. 56.

Mackey, Stephen, Spain Auds See Sudden Rise in Novela Prodn, Variety, September 28October 4, 1998, Mipcom sup., p. M38.

Millman, Joel, We Invest Incestuously, Forbes, August 3, 1992, pp. 7475.

Paxman, Andrew, Colombia TV Decides to End Game of Monopoly, Variety, March 2329, 1998, p. 56.

Sabogal, Hugo, Barril de burbujas, AméricaEconomía, August 2, 2001, pp. 5558.

_____, Horas amargas, AméricaEconomía, August 27, 1998, pp. 3738.

_____, Lluvia de señales, AméricaEconomía, July 16, 1998, pp. 3738.

_____, Santo Domingo se concentra, AméricaEconomía, January 22, 2000, pp. 2931.

Thomson, Adam, The Santo Domingo Empire, Latin Trade, March 1998, pp. 6768, 70.

Wilson, James, BellSouth Purchases Cellular Stake in Colombia, Financial Times, May 26, 2000, p. 29.

_____, Economic Crisis Hits Print Run of Colombia Daily, Financial Times, August 31, 2001, p. 8.

_____, Renault to Take Control of Plant in Colombia, Financial Times, December 9, 2002, p. 18.

_____, Valores Hopes Slimming Will Draw Foreigners, Financial Times, July 31, 2002, p. 25.