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Isagen Drops Most in Four Months as Zuluaga Leads Colombia Vote

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May 26 (Bloomberg) -- Isagen SA tumbled in Bogota trading after Oscar Ivan Zuluaga, who opposes the sale of the government’s stake in the hydropower company, led the first round of Colombia’s presidential vote.

The shares fell 4.6 percent to 2,935 pesos at the close in Bogota, the biggest drop since Jan. 31. It was the worst performer on the benchmark Colcap index, which fell 0.2 percent.

Zuluaga, an ally of former President Alvaro Uribe, won 29.3 percent of the votes yesterday with 99.97 percent of polling stations reporting. President Juan Manuel Santos garnered 25.7 percent. The two candidates are headed for a runoff June 15.

“There is downside risk to the stock,” Rupert Stebbings, managing director of equity sales at Bancolombia SA, said in a phone interview. “There are a lot of balls up in the air. Such uncertainty may well have investors thinking twice.”

Santos has said an Isagen stake sale would be used to help finance the country’s 47 trillion pesos ($25 billion) road construction program known as Fourth Generation, or 4G. A Colombian court last year rejected Uribe’s attempt to block the sale.

Should Zuluaga win Colombia’s top post, Isagen will likely fall to where it was trading prior to the government’s July 29 announcement that it would sell the stake, according to Jaime Pedroza, an analyst at Credicorp Capital’s Colombia unit in Bogota. The shares closed at 2,745 pesos on July 26.

“Current prices are driven by speculation on a sale rather than the company’s fundamentals,” Pedroza said in a telephone interview from Bogota. “Many investors bought it thinking they could sell it at a higher price.”

Isagen rallied the most since 2009 on May 22 after a court cleared the way for the government to sell its stake. The Santos administration has said 5 trillion pesos is the minimum price it will accept for its 57.6 percent stake in the operator of the nation’s largest hydropower plant.

Empresa de Energia de Bogota’s Chief Executive Officer Sandra Fonseca told RCN TV on May 23 that the company won’t bid for the government stake in Isagen after the antitrust regulator put conditions on a potential deal.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Matthew Bristow, Bradley Keoun

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