Monthly report: Latin America- October, 2017

Number of announced and closed transactions in Latin America fell by 13% in October

  • LatAm Deal volume fell 13% in October 2017
  • Aggregate deal value fell 72% to USD 6.3bn
  • Deal of the Month: Intercorp acquires Seguros Sura and Hipotecaria Sura from Sura Asset                           Management and Grupo Wiese for USD 276.4m

LATIN AMERICA: MARKET INSIGHTS

  • The total number of announced and closed transactions in Latin America fell by 13% in October over the same month last year
  • Aggregate transaction value fell 72% relative to the close of October 2016 to USD 6.3bn, considering 68 deals of disclosed consideration region wide.
  • Total transaction volume YTD is up 2.5%, meanwhile, though aggregate deal value has slipped nearly 26% to 72.7bn in the first 10 months of the year, taking into account 719 announced and closed transactions of disclosed consideration regionally.
TOP SIX MARKETS IN LATIN AMERICA
  1.  Brazil leads deal flow regionally with 855 transactions together worth USD 44.6bn to the close of October, up 4% by volume, down 6% by aggregate value compared to the first 10 months of 2016. There were 378 announced and closed transactions with a disclosed consideration in Brazil contributing to aggregate value in the first 10 months of the year.
  2.  Mexico follows with 237 deals worth a combined USD 14.8bn, down 2% by volume and 18% by aggregate value relative to the same 10-month period in 2016, taking into account 109 deals of disclosed consideration.
  3.  Chile ranks third regionally, its 193 deals YTD together worth USD 6.6bn to the close of October, up 15% by volume and down 47% by aggregate value over the first nine months of 2016, taking into account 83 transactions of disclosed consideration.
  4.  Argentina ranks fourth in Latin America at the close of October with 177 announced and closed deals worth a combined USD 4.6bn, up 8% by volume and down 41% by aggregate value, considering 77 transactions for which a deal value was disclosed.
  5.  Colombia follows with 132 deals in the first 10 months of the year, up 5% over the same period last year. Aggregate deal value fell 83% to just under USD 3bn, taking into account 49 transactions of disclosed consideration.
  6.  Peru rounds out the top six M&A markets in the region, though it continues to slip in both transaction volume and aggregate deal value, 12% relative to the first 10 months of 2016 to 105 deals and 27% to USD 3.6bn respectively, taking into account 49 transactions of disclosed consideration.


CROSS-BORDER DEALS

Bidders based in Latin America made three extra-regional cross-border acquisitions in October, two with targets in North America, and one in the EU.

North American buyers led inbound acquisitions in the region during the month of October, with 18 deals originating from the US and Canada. European acquirers made 13 inbound deals in the region. Asian buyers made three acquisitions in Latin America and one Australian firm invested in the region in October.

DEAL OF THE MONTH

TTR selected the closing of Intercorp Financial Services’ USD 276.4m acquisition of Peruvian insurance and mortgage companies Seguros Sura and Hipotecaria Sura from Colombia’s SURA Asset Management and Grupo Wiese as October’s Deal of the Month.

The closing marks the exit of the Colombian financial services group from these segments in Peru. The buyer was advised by Miranda & Amado Abogados, the target used Intralinks. SURA Asset Management and Grupo Wiese were advised by Rebaza, Alcázar & De Las Casas Abogados Financieros.

 

 

 

Interview: Iván Delgado – Pérez-Llorca

Iván Delgado

Corporate Partner and Head at

Pérez-Llorca New York office

TTR interviews Iván Delgado, from Pérez-Llorca New York. The partner compares last year’s M&A market in Latin America with 1st half of 2017.

(ENGLISH)

Mr. Delgado, we already had the pleasure of interviewing you last year. Compared with the M&A market in Latin America in 2016, how would you describe the progress of the market so far this year? Have you seen any significant changes in trends? If so, to what do you think it is due?

I would describe the progress as positive. In the second quarter of the year we have seen a slight increase in transactions compared to the same period of the previous year (493 vs. 509 transactions, respectively). While I believe that there has not been a significant change in this trend, there has however been an increase in the number of transactions that are closing, which could be interpreted as a sign of foreign investor confidence in Latin America, despite the political instability we have seen in recent years in certain countries in the region.

With regard to the private equity market, a segment in which you are an expert, according to TTR aggregate YTD data, investment by private equity firms in Latin America appears to have decreased in comparison with the previous year. However, in this last quarter, there have been more transactions occurring than during the same period in 2016. How would you take stock of private equity activity?

I think the trend in 2017 with respect to private equity is positive. While the first quarter, as shown in the statistics, had less activity than last year, it seems that the sector is finally back on track in terms of growth. Forecasts for the second half of the year are also positive.

With regard to private equity firms investing in Latin American companies, those which most stand out are firms whose headquarters are located in the United States, the United Kingdom and Canada. As head of Pérez-Llorca’s New York office, what qualities or characteristics of Latin American companies do you believe attract the interest of foreign investors?

In Pérez-Llorca’s experience, when investing in Latin American companies, private equity firms mainly value: (I) the company’s good reputation in the field of corruption and prevention of money laundering; (ii) the consolidated position of the company in the local or regional market; and (iii) the desire for international growth with a view to expanding and integrating into other markets.

With regard to the activity of venture capital firms in LatAm, a growing trend has been identified over the course of 2017. Do you think that there is a greater interest on the part of investors in newly incorporated companies and in the entrepreneurial world, in line with global trends?

Yes. In recent years we have seen how interest in newly created companies has grown exponentially worldwide. Latin America is no exception and although it has not been at the same pace as other markets such as the European or American markets, venture capital fund investment has grown considerably in the region.

Generally speaking, so far this year, we have seen a modest upward trend in activity in the M&A market in Latin America, from country to country.  What does the future hold for the end of the financial year? In your opinion, which Latin American countries do you consider are showing a greater potential for growth in investments?

The forecast for the second half of the year is positive. We hope that the number of transactions continues to increase. In my opinion, the Latin American countries with the greatest potential for growth in the short term are: Peru, Argentina and Chile, as shown in recent years (mainly in M&A, private equity and venture capital transactions, without forgetting the large markets of Mexico and Brazil.

 

(ESPAÑOL)

 

Sr. Delgado, ya tuvimos el placer de entrevistarlo el año pasado, en comparación con el escenario de M&A en Latinoamérica en 2016, ¿cómo describiría la marcha del mercado en lo que llevamos de año? ¿Se ha podido apreciar algún cambio de tendencia significativa según su opinión? De ser así, ¿a qué cree que es debido?

Positiva. En el segundo trimestre del año hemos visto un ligero aumento de las operaciones respecto al mismo período del año pasado (493 vs. 509 transacciones, respectivamente). Si bien creo que no ha habido un cambio significativo en la tendencia, sí podría destacarse el incremento de las operaciones cerradas, lo que puede interpretarse como una muestra de confianza del inversor extranjero en Latinoamérica, a pesar de la inestabilidad política en determinados países de la región que hemos visto en los últimos años.

En cuanto al mercado de private equity, segmento en el que usted es especialista, según lo registrado en TTR, de manera agregada YTD se ha observado que en Latinoamérica han disminuido las inversiones de firmas de capital riesgo en comparación con el año anterior. Sin embargo, en este último trimestre sí que se han superado las operaciones ocurridas durante ese mismo periodo en 2016. ¿Qué balance haría de la actividad private equity?

Creo que la tendencia en 2017 respecto a private equity es positiva, y YTD el balance también. Si bien el primer trimestre, tal y como reflejan las estadísticas, la actividad fue menor que la del año pasado, parece que finalmente el sector ha retomado la senda del crecimiento. Las previsiones para el segundo semestre son igualmente positivas.

En cuanto a las firmas de private equity inversoras en empresas latinoamericanas, destacan aquellas cuya sede se encuentra en Estados Unidos, Reino Unido y Canadá. Como responsable de la oficina de Pérez-Llorca en Nueva York ¿Qué cualidades o características de las sociedades latinas cree que despiertan el interés de los inversores extranjeros?

En la experiencia de Pérez-Llorca, a la hora de invertir en empresas latinoamericanas las firmas de private equity valoran principalmente: (i) la buena reputación de la compañía en materia de corrupción y prevención de blanqueo de capitales; (ii) la posición consolidada de la compañía en el mercado local o regional; y (iii) la vocación por la proyección y crecimiento internacional de cara a una futura expansión e integración en otros mercados.

Respecto a la actividad de las firmas de venture capital en LatAm, se ha observado una tendencia creciente a lo largo de 2017, ¿cree que existe un mayor interés por parte de inversores en las sociedades de nueva creación y en el universo emprendedor, siguiendo la tendencia global?

Sí. En los últimos años hemos visto como el interés por las sociedades de nueva creación ha crecido de manera exponencial a nivel global. Latinoamérica no ha sido la excepción y, si bien no al mismo ritmo que otros mercados como el europeo o el estadounidense, ha experimentado también un crecimiento considerable la inversión de fondos de venture capital.

En general en lo que llevamos de año, de un modo más o menos modesto según el país, se han reflejado unos datos positivos que manifiestan un incremento de la actividad en el mercado de M&A latinoamericano, ¿qué futuro próximo augura para el cierre del ejercicio? Según su criterio ¿cuál o cuáles son los países latinos que considera están mostrando un mayor potencial de crecimiento en inversiones?

La previsión para el segundo semestre del año es positiva, esperamos que el número de operaciones siga aumentando. En mi opinión, los países de Latinoamérica con mayor potencial de crecimiento a corto plazo son: Perú, Argentina y Chile, tal y como vienen demostrando en los últimos años (principalmente en operaciones de M&A, private equity y venture capital), sin olvidar de los grandes mercados que siempre han sido y son Méjico y Brasil.

 

LATAM: AGGREGATE DEAL VALUE GROWS 85% IN 1H17

  • Deal volume in LATAM increased 3% in 2Q17 over 2Q16
  • Aggregate deal value is up 86%
  • Deal of the Month: Grupo México Transporte acquires Florida East Coast Railway for USD 2bn
TTR Insight

Deal volume in Colombia’s Oil &Gas sector increased 100% in 1H17 over the same six-month period in 2016, according to Transactional Track Record data. There were eight announced and closed transactions in the sector in the first six months of 2017 compared to four in 1H16.

 

 

Deal volume regionwide rose 3% in 1Q17 over 1Q16, with 509 announced and closed transactions in Latin America to the close of June. M&A activity is up 5% YTD, meanwhile, with 1,026 announced and closed deals in the region in 1H17.

Aggregate transaction value increased by 86% in 2Q17 over 2Q16 to USD 33bn regionwide, taking into account 218 deals of disclosed consideration. YTD, aggregate deal value is up 85% to USD 73.4bn, including 417 announced and closed transactions of disclosed consideration regionally in 1H17.

Top Six M&A Markets in LATAM

Brazil led deal flow regionally with 512 transactions together worth USD 44.5bn in 1H17, up 8% by volume and 220% by aggregate value compared to 1H16. There were 209 announced and closed deals of disclosed consideration in Brazil to the close of June contributing to 1H17 aggregate value.

Mexico follows with 148 deals worth a combined USD 10.7bn, up 1% by volume, down 13% by aggregate value, taking into account 57 deals of disclosed consideration, relative to the same half-year period in 2016.

Chile ranks third regionally with 120 deals together worth USD 5.1bn to the close of 1H17, up 13% by volume and down 49% by aggregate value over the first six months of 2016, taking into account 54 transactions of disclosed consideration.

Argentina continues to garner growing deal flow, with 117 announced and closed deals in 1H17 worth a combined USD 3.6bn, up 13% by volume and 3% by aggregate value, considering 41 transactions for which a consideration was disclosed.

Colombia registered 78 deals in 1H17, the same volume as in 1H16, while aggregate value grew 155% to USD 13.1bn, taking into account 30 transactions of disclosed consideration.

Peru rounds out the top six M&A markets in the region, notwithstanding a sizeable dip in both transaction volume and aggregate deal value. Transaction volume fell 27% to 58 deals while aggregate deal value declined 26% to USD 1.7bn, taking into account 32 transactions of disclosed consideration.

Cross-Border Deals

LATAM firms made 15 extra regional cross-border acquisitions in 2Q17, eight with targets based in North America, four in the EU, one in Asia and one in Australia. EU-based buyers led inbound acquisitions in Latin America in 2Q17, with 67 deals originating from the old world, US and Canada following with 59 transactions. Asian buyers led 19 transactions in Latin America, Australian firms seven and a sole Africa-based acquirer invested in the region.

Deal of the Quarter

TTR selected Grupo México Transporte’s USD 2bn acquisition of Florida East Coast Railway from Fortress Investment Group (NYSE:FIG) as Deal of the Quarter in LATAM. The buyer was advised by Galicia Abogados, Dechert and BBVA Bancomer, while the target was advised by Cravath, Swaine & Moore, Sidley Austin, Barclays Bank and Morgan Stanley.

Interview with Posadas, Posadas & Vecino

Tomás Gurméndez, partner at Posadas, Posadas & Vecino, discusses the M&A market in Uruguay and across Latin America
(Interview in English and Spanish)

TTR in the Press

BN AMERICAS – “Regional M&A activity shows heavy surge in valuation in H1

AMÉRICA ECONOMÍA – “Fusiones y adquisiciones de América Latina aumentan 86,38% en el 2Q17

EL FINANCIERO – “Las mexicanas duplican el valor de compras en EU

 

Complete Report

LATAM: DEAL VOLUME AND AGGREGATE VALUE DOWN MODERATELY IN MAY

  • Deal volume was down 1.7% in May 2017 over May 2016
  • Aggregate deal value fell 10% for the month
  • Deal of the Month: Saeta Yield acquires the Uruguay-based companies and Fingano for USD 65m
TTR Insight

Deal volume in Latin America’s Pharmaceutical, Parapharmaceutical and Cosmetics sector increased 67% between January and May 2017 compared to the same five-month period in 2016, according to TTR data (www.TTRecord.com), in collaboration with Ontier. There were five announced and closed deals in the sector in the first five months of 2017 compared to three over the same period last year.

Deal volume fell 1.7% in May across Latin America with 172 announced and closed transactions region wide. YTD, volume is up 5.5%, meanwhile, with a total of 857 deals in the first five months of the year.

Aggregate transaction value fell 10% regionally in May to USD 6.7bn, taking into account the 70 deals with a disclosed consideration. YTD, the aggregate value of the 334 transactions with a disclosed consideration increased 89% compared to the same January-May period in 2016, meanwhile.

Top Six M&A Markets in Latin America

Brazil dominated regional M&A activity YTD with 425 deals together worth USD 37.8bn, up 8% by volume and 227% by aggregate value compared to the same five-month period in 2016. There were 168 announced and closed deals of disclosed consideration in Brazil to the close of May contributing to YTD aggregate value.

Mexico followed with 118 deals worth a combined USD 9.3bn, up 1% by volume, down 14% by aggregate value, including the 45 deals of disclosed consideration, relative to the same January-May period last year.

Chile ranked third regionally with 104 deals together worth USD 3.3bn to the close of May, up 14% by volume and down 55% by aggregate value over the first five months of 2016, taking into account 44 transactions of disclosed consideration.

Argentina followed close behind, with 102 announced and closed deals YTD, up 15% by volume and 23% by combined value, considering the 41 transactions for which a sum was disclosed.

Colombia was down 1% by deal volume and up 188% by aggregate value to the close of May, with a total of 67 transactions, 24 with disclosed consideration together worth USD 12.7bn.

Peru rounds out the top six M&A markets in the region, despite a 29% decline in deal volume to 47 and a 26% fall in aggregate value to USD 1.4bn, taking into account 23 transactions of disclosed consideration.

Cross-Border Deals

Latin American firms made four outbound acquisitions in May 2017, two with targets based in North America, one in the EU and one in Asia. North American and EU-based buyers led inbound acquisitions in Latin America during May, with 24 deals originating from the US and Canada and 23 from across the pond. Asian buyers targeted three companies in Latin America and Australian buyers made two acquisitions in the region.

Deal of the Month

TTR selected the Saeta Yield’s USD 65m acquisition of Uruguay-based Vengano and Fingano, owners and operators of the Carapé I and Carapé II wind farms, from Argentina’s Corporación América and Spain’s Grupo San José as Deal of the Month. The buyer was advised by Jimenez de Arecha, Viana & Brause alongside Clifford Chance España. The sellers were advised by Guyer & Regules, M&M Bomchil Abogados and Lazard.

Interview with Brigard & Urrutia

Darío Laguado, legal partner from Brigard & Urrutia, discuss with TTR about his perspectives about the M&A market in Colombia and Latin America (Interview in english and spanish).

Rankings – Financial and Legal Advisory

Find the TTR ranking of financial and legal advisors (year to date) in our monthly report.

TTR in the Press

FORBES – “Chile gana atractivo entre empresas mexicanas”

LA REPUBLICA – “Prestasalud y Continental, dos de los negocios que se cerraron este mes”

GESTIÓN – “M&A en América Latina: Monto transado crece 89.4% hasta mayo del 2017”

Complete Report

Technology leads deal flow in Brazil

TTR-Deal-Tracker

TTR Deal Tracker
www.TTRecord.com

LATIN AMERICA

TTR Deal Tracker is a monthly email update identifying M&A trends in Latin America and compiling YTD rankings of leading financial and legal advisors

BRAZIL: Technology sector buoyant

Financial Services deals have increased by 100% YTD compared to the first two months of 2015, according to TTR data (www.TTRecord.com).

There were eight deals in the space in the first two months of 2015 compared to four in the corresponding period last year.

CHILE: Real Estate asset deals on the rise

Financial Services deals have increased by 100% YTD compared to the first two months of 2015, according to TTR data (www.TTRecord.com).

There were eight deals in the space in the first two months of 2015 compared to four in the corresponding period last year.

Rankings / League Tables

Latin America Ranking – 2016

Financial Advisory – Year to Date (YTD)

Banco Itaú BBA leads TTR’s Latin America financial advisory ranking for the first two months of 2016 with six deals worth a combined USD 975m, the same number of transactions it advised on by the end of February 2015, when it also led the chart with six deals, then worth USD 219m in aggregate. Banco BTG Pactual follows in second with half as many transactions YTD, worth USD 716m, compared to two in the first two months of 2015 worth USD 171m. BBVA is tied for third with BR Partners, Ártica Investimentos and BNP Paribas, all with two advisory mandates in the first two months of the year and all of them absent from the top 10 in the corresponding period of 2015. BBVA nonetheless leads the chart by aggregate deal value, its two deals worth a combined USD 3.9bn. The last four positions in the ranking are shared by investment banks that advised on just one transaction to the end of February 2016, none of them having ranked among the top 10 for the first two months of 2015.Legal Advisory – Year to Date (YTD)

Baker & McKenzie shares its lead with Jones Day in TTR’s Latin America legal advisory ranking at the close of February, each with three transcations YTD. Baker & McKenzie also led the chart for the corresponding period in 2015, when Jones Day didn’t appear among the top 10. Davis & Gilbert, also absent from the top 10 a year ago, ranks third with two deals under its belt YTD. Fourth place by deal volume is shared by seven firms that have each advised on a sole transaction to the end of February, Allen & Overy and Ashurst with the greatest reported deal value of the lot at USD 1bn.

Brazil Ranking – 2016

Financial Advisory – Year to Date (YTD)


Banco Itaú BBA leads TTR’s Brazil financial advisory ranking by transaction volume with five deals YTD worth a combined USD 757m.Itaú is down one deal compared to its performance in the first two months of 2015, but up 245% by aggregate value from its six deals together worth USD 219m a year ago. Banco BTG Pactual follows in second with three deals together worth USD 716m. BTG Pactual ranked third at the close of February, 2015 when it’d advised on two deals worth USD 171m. BR Partners has advised on two transactions YTD worth USD 951m in aggregate, putting the firm in third place, up from seventh at the close of February 2015 when it’d advised on a sole transaction in the first two months of the year. Seven firms share fourth by volume with one deal each YTD, BAML sitting on top of the group with the greatest transaction value, which it shares with BR Partners. Of these, only IGC Partners Assessoria Empresarial was among the top 10 at the close of February 2015, when it placed fifth with two deals of undisclosed consideration.

Legal Advisory – Year to Date (YTD)


Souza Cescon Advogados leads TTR’s Brazil legal advisory ranking at the close of February with seven transactions YTD worth a combined USD 1.7bn, up from seventh place a year ago when the firm had advised on five deals together worth USD 8m. TozziniFreire Advogados ranks second with six deals worth a combined USD 322m YTD after not having ranked among Brazil’s top 10 firms for the first two months of 2015. Stocche, Forbes, Padis, Filizzola, Clapis, Passaro, Meyer e Refinetti Sociedade de Advogados ranks third, advising on five transaction in the first two months of 2016 worth USD 231m in aggregate. It too was absent from the top 10 a year ago. Pinheiro Neto Advogados, also with five mandates YTD, is down by one deal from its performance a year ago. Lefosse Advogados, in fifth, has advised on four deals in the first two months of the year, worth USD 472m combined. Lefosse did not place among the top 10 at the end of February 2015. Machado, Meyer, Sendacz e Opice Advogados ranks sixth, also with four advisory mandates YTD,  down from second a year ago when it’d advised on seven transactions in the first two months of the year. The firm’s aggregate deal value is up by 39% from USD 163m a year ago. Koury Lopes Advogados added one deal and climbed three positions in the ranking from tenth a year ago to place seventh. Pinheiro Guimarães Advogados lost two transactions compared to its performance in the first two months of 2015, falling from fifth to ninth in the ranking as a result, its aggregate deal value up by 12% from USD 188m a year ago. Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados fell from first in the chart at the close of February 2015 to tenth with two mandates YTD compared to nine for the corresponding period last year, its aggregate deal value jumping by 280% to USD 352m from USD 93m a year ago, nonetheless.

Mexico Ranking – 2016

Financial Advisory – Year to Date (YTD)

BBVA, Deutsche Bank, JPMorgan and Morgan Stanley all participated in the same transaction in Mexico that closed at the end of January, placing the four banks at the top of TTR’s Mexico financial advisory ranking for the first two months of the year. PwC follows in fifth place, also with a sole transaction under its belt, in its case of undisclosed consideration.Legal Advisory – Year to Date (YTD)

Santamaria y Steta Abogados leads TTR’s Mexico legal advisory ranking at the close of February with three advisory mandates YTD. The firm was not among the top 10 at the close of February 2015. Galicia Abogados follows in second, up from third a year ago, with one deal in both corresponding two-month periods. The remaining firms in the chart have also advised on a sole deal YTD, Ritch Mueller being the only among them to have ranked among the top 10 a year ago when it held the same seventh place position.