Latin American M&A booms to 10-year excessive of $105 bln to this point this 12 months

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SAO PAULO, Oct 4 (Reuters) – Mergers and acquisitions in Latin America have been above $105 billion within the first 9 months of the 12 months, the best quantity in a decade, in accordance with Refinitiv knowledge, as massive quantities of contemporary capital fueled a deal frenzy within the area.

“Proceeds of IPOs and share offerings have financed acquisitions in a range of industries, such as healthcare, oil and gas, power, fintechs and retail”, mentioned Ricardo Bellissi, co-head of funding banking at Goldman Sachs in Brazil.

Even with Latin American fairness markets hit by volatility, larger inflation and rates of interest, particularly in Brazil, the place there may be additionally a presidential election subsequent 12 months, most bankers don’t count on a drop in near-term M&A.

After elevating $25 billion in fairness choices this 12 months and nearly $30 billion final 12 months, Latin American corporations have robust money positions to finance M&A.

“Even with higher inflation, interest rates rising and an election in Brazil next year, the deal flow is expected to remain strong”, mentioned Bruno Amaral, head of M&A at Banco BTG Pactual, Latin America’s chief in Refinitiv M&A rating by September.

Amaral can be optimistic about potential offers in Chile, one of many Latin American nations that finest dealt with the pandemic, and Peru and Colombia, which like Chile are benefitting from excessive commodity costs.

The largest deal of the area to this point is the proposed $9.5 billion takeover of NotreDame Intermedica (GNDI3.SA) by rival Hapvida SA (HAPV3.SA), nonetheless beneath evaluation of Brazilian antitrust watchdog CADE.

Other prime offers included Univision’s acquisition of Grupo Televisa’s belongings and the spin off of Brazilian retailer GPA SA’s (PCAR3.SA) wholesale division Asai (ASAI3.SA), with values near $5 billion every.

Among probably the most energetic industries are healthcare, nonetheless very fragmented within the area, and fintechs, attracting quite a lot of investor curiosity as they seize a bit of a market lengthy dominated by brick and mortar banks.

Privatization and infrastructure offers are contributing to larger deal values. The public sale of state-owned water and sewer operations in Rio de Janeiro raised 22.6 billion reais and the sale of operator Oi’s fiber and cellular items, nearly 30 billion reais. In one other upcoming transaction, America Movil is slated to spin off its Latin America tower enterprise by year-end. learn extra

Sales of refineries by state-controlled oil firm Petrobras and fiber items by Copel, Telefonica and TIM in Brazil are anticipated for the subsequent months.

Cross border exercise additionally picked up. “Brazilian companies are back to acquisitions abroad,” mentioned Luiz Muniz, companion and head of Latin America at Rothschild & Co, citing JBS unit Pilgrim’s Pride Corp’s 819 million-euro acquisition of Kerry Group Plc’s British and Irish shopper meals items, amongst others.

SPACs, coping with excessive goal costs in North America are additionally focusing within the area, however have but to announce a big deal.

Financial advisory could be very energetic in Latin America, with 77% of offers above $100 million utilizing monetary advisors.

ELECTION VOLATILITY

Even as Brazil’s benchmark Bovespa index has fallen 5% this 12 months and greater than 50 corporations determined to delay or cancel their IPOs, fairness issuance was steady within the first 9 months of 2021, with $21.12 billion in share choices.

In Latin America as a complete, the overall rose 12%, boosted by Mexican corporations resembling America Movil, which bought a $2.7 billion convertible bond, and Corporacion Inmobiliaria Vesta, and one difficulty from Uruguay.

Bankers say Brazilian corporations are simply ready for a greater interval in fairness markets to launch their choices.

“Some companies can bring forward the timing of their deals to avoid unnecessary exposure to volatility, which might happen in an election year in Brazil”, said Rodolfo Soares, Goldman Sachs’s co-head of investment banking in the country.

The table below ranks M&A financial advisors in the region

Financial advisors ranking- Any Latin American involvement (Announced, Year to Date)

Source- Refinitiv

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

A woman looks at an electronic board showing the graph of the recent fluctuations of market indices on the floor of Brazil's B3 Stock Exchange in Sao Paulo, Brazil, April 3, 2019. REUTERS/Amanda Perobelli