Latin American M&A booms to 10-year high of $105 billion so far this year

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SAO PAULO (Businesshala) – Mergers and acquisitions in Latin America topped $105 billion in the first nine months of the year, the highest volume in a decade, according to Refinitiv data, as huge amounts of fresh capital sparked a deal frenzy in the region. aired it. .

FILE PHOTO: A woman looks at an electronic board showing a graph of the recent movements of market indices on the floor of the Brazilian B3 stock exchange in Sao Paulo, Brazil April 3, 2019. REUTERS/Amanda Perobelli

“The proceeds of IPOs and share offerings have financed acquisitions in a range of industries such as healthcare, oil and gas, power, fintech and retail,” said Ricardo Bellisi, co-head of investment banking at Goldman Sachs in Brazil.

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Even with Latin American equity markets being hit by volatility, high inflation and interest rates, especially in Brazil, which also has a presidential election next year, most bankers don’t expect a decline in near-term M&A. Is.

After raising $25 billion in equity offerings this year and nearly $30 billion last year, Latin American companies have a strong cash position to finance M&A.

Bruno Amaral, Head of M&A at Banco BTG Pactual, Latin America leader in the Refinitiv M&A rankings through September, said: “With high inflation, rising interest rates and elections in Brazil next year, deal flows are strong. Hope to stay.”

Amaral is also optimistic about potential deals in Chile, one of the Latin American countries that has best handled the pandemic, and Peru and Colombia, which, like Chile, are benefiting from higher commodity prices.

The sector’s biggest deal to date is a proposed $9.5 billion acquisition of Notredem Intermedica by rival Hapvida SA, which is still under analysis by Brazilian antitrust watchdog CADE.

Other top deals included Univision’s acquisition of Grupo Televisa’s assets and the spin-off of Asai, the wholesale division of Brazilian retailer GPA SA, each valued at close to $5 billion.

Among the most active industries are healthcare, which is still very fragmented in the sector, and fintechs, attracting a lot of investor interest as they grab a piece of the market dominated by brick and mortar banks.

Privatization and infrastructure deals are contributing to higher deal values. The auction of state-owned water and sewer operations in Rio de Janeiro fetched 22.6 billion reais and operator OE’s sales of fiber and mobile units, approximately 30 billion reais. In another upcoming transaction, America Move is set to close its Latin America tower business by the end of the year.

The sale of refineries by state-controlled oil company Petrobras and fiber units in Brazil by Copel, Telefónica and TIM are expected in the next months.

Cross-border activity also picked up. Luiz Muniz, partner and head of Latin America at Rothschild & Co., cited the 819 million euro acquisition of British and Irish consumer food units of Kerry Group plc of JBS unit Pilgrims Pride Corp. are back.”

SPAC, which deals with higher target prices in North America, is also focusing in this area, but has yet to announce a major deal.

Financial advice is very active in Latin America, with 77% of deals over $100 million using financial advisors.

election instability

Even as Brazil’s benchmark Bovespa index is down 5% this year and more than 50 companies have decided to delay or cancel their IPOs, equity issuance was stagnant in the first nine months of 2021. , which had $21.12 billion in share offerings.

Across Latin America, the total increased by 12%, fueled by Mexican companies such as América Movil, which sold convertible bonds worth $2.7 billion, and Corporacion Inmobiliaria Vesta, and an issue from Uruguay.

Bankers say Brazilian companies are waiting for a better period in the equity markets to launch their offerings.

“Some companies may push ahead with the timing of their deals to avoid the unnecessary risk of volatility, which could happen in an election year in Brazil,” said Rodolfo Soares, Goldman Sachs’ co-head of investment banking in the country.

The table below ranks M&A financial advisors by region

Financial Advisor Ranking – Any Latin American Partnership (announced, year by year)

Advisor value ($ billion) Number of deals

Banco BTG Pactual 31.16 55

JP Morgan 29.1 23

Ita, Unibanco 24.38 34

City 19.64 15

Goldman Sachs 2:39 pm 17th

BofA 11.34 12

Santander 11.31 37

Morgan Stanley 11.199

Rothschild & Company 10.92 24

XP Investment 10.16 15

Total 105.466 1,314

Source- Refinitiv

Reporting by Tatiana Botzer; Editing by Christian Plumb and Alistair Bell

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