LatAm M&A activity solid in Q1

Latin America saw 421 M&A, private equity and venture capital deals in the first quarter of 2018, down 16.8% from 1Q17. However, 160 transactions reported total deal valuation of some US$29bn, a 29.7% year-on-year improvement, according to a quarterly analysis from Transactional Track Record (TTR).

Importantly,the larger total deal value with overall regional activity owes greatly to a single transaction - the merger of two Brazilian pulp outfits, Suzano Papel e Celulose and the world's largest pulp producer Fibria Celulose. That deal, which solidified over the second half of March, represents a total deal value of around US$11.2bn, according to TTR.

Excluding this deal, the total reported valuation of deals in Brazil in the first quarter resulted in a 67% y-o-y drop in reported deal values, instead of the 3.6% increase as the deal materialized at the end of the quarter.

Furthermore, the Latin American total reported deal value would have shown a 20.1% decline y-o-y without the Fibria deal. So the transaction firmed up in time to keep quarterly numbers on the positive side.

Activity in Mexico, on the other hand, is showing a broader rebound, with a 15% y-o-y increase in the number of deals (75) and 31 of those deals valued at a total of US$5.95bn, up 53% y-o-y.

Number and value of deals were also up for Argentina (number +14%, reported value +25%) and Colombia (+45% and +778%, respectively). Peru saw higher total reported deal value (+238%), but lower total transactions (-14%), while Chile saw fewer operations (-47%) and much lower total reported values (-62%).

Private Equity and VC

Both private equity and venture capital transactions taking place in the region in Q1 reflected fewer transactions, though mobilizing much more total capital than the year before.

TTR recorded 21 private equity deals over 1Q18, seven of which reported raising a total of US$3bn in capital. This represents a 45% drop in the number of equity deals from the same period a year before; however, total reported capital raised was up 424%.

There have been 71 venture capital deals in the first quarter with 39 of these reporting capital injections totaling US$584mn. This translates to 4% fewer VC transactions, but a 222% annual increase in total capital raised through VC in the period.

Cross-border activity

Outbound deals from Latin America were primarily focused on properties in North America and Europe, generating 10 and 4 operations, respectively.

In 1Q18, there were 50 inbound deals to Latin America from North America, followed by 49 from Europe and 16 from Asia.