The total value of mergers and acquisitions in Latin America during the first half of 2012 increased significantly compared with the previous year. Total transactions grew from S17.8 billion in Q2 2011 to $42.7 billion in Q2 2012 – growth of over 140%. In comparison, the value of U.S. M&A transactions decreased -8% in the same time period. Latin American activity reached 184 M&A and 17 venture capital transactions.
M&A Trends in Latin America
Source: M&A Monthly Insider July 2012
The most active Latin-American countries for M&A transactions during the first half of 2012 were (in order) Brazil, Mexico, Colombia and Chile. Colombia rose to become the third most active market, benefiting from the appreciation of the Colombian Peso and the recent approval of the Free Trade Agreement in the U.S. Congress in October of last year. Mexico, Latin America’s second largest economy with a population of almost 115 million people, also saw increased interest from foreign investors as a result of stable macroeconomic performance.
Brazil, Latin America’s largest market, maintained its number one position, but lost relative ground as investors grew more cautious about the country’s prospects in the face of global uncertainties. According to Bruno Nahon, partner of Aria Capital, Brazil has been impacted by European and Chinese economic slowdowns more severely than other regional economies such as Mexico.
Other countries in Latin America also contributed to first half growth, albeit at much smaller scale. For example, in Q1 Costa Rica had two reported transactions with a total value of USD$ 1bn.
M&A Volume in Latin America by Country
(First Half 2012)
Pierre-Georges Roy, Partner of GroupArgent stated that “it is evident that investors are looking to Latin America for the continued high growth rates in many industries relative to peers in developed countries. We have seen increased interest and a noticeable uptick in movement in the region. However, investors are still wary of closing transactions before the U.S. elections, as due to the uncertainty with the European economy. As the picture for both situations becomes less murky, investors are beginning to move faster.”
The most active M&A industries in Latin America were Energy & Mining, Consumer and Industrials & Chemicals. Technology, Media and Telecom (TMT) sector activity decreased slightly relative to the same period last year.
GroupArgent is a New York based investment bank and business accelerator in the advertising, content, and e-commerce sectors of the digital economy. Our professionals are entrepreneurial, experienced, and effective in creating exceptional outcomes for our clients. As a direct result of our industry focus and international execution capabilities we have capitalized on new market opportunities and completed 100+ transactions, both domestically and abroad. Our multilingual staff in our New York, London, Sao Paulo and Buenos Aires covers hubs of industry excellence worldwide.
Additional sources: Merrill Datasite