Latin America M&A activity trending down

M&A activity in Latin America continues on a downward trajectory, according to Transactional Track Record (TTR).

The research company recorded 1,411 transactions for January-August, down 3.42% year-on-year. Aggregate value for the period stood at US$58.2bn, down 2.79%.

For August the firm recorded 140 deals, down from 187 a year earlier.

In January-July of this year, the number of M&A deals was 1,202, down 5.65% year-on-year.

This week a senior Chilean central bank official said that on the global stage some investors had entered standby mode while they wait to see whether US President Donald Trump – whose erratic trade policy announcements have raised levels of uncertainty among the likes of manufacturers – is voted in or out of the White House in November 2020. 

This reduced visibility, added to sluggish growth and reform issues in Brazil and heightened political risk in Argentina and, to a lesser degree, Mexico, could be dampening deal activity.  

In Latin America, the energy and technology sectors, however, continue to attract investor interest. Indeed, the biggest deal in August involved Luxembourg-registered telco Millicom International buying Spanish telco Telefónica’s Panama operation for US$594mn. The acquisition was carried out through Millicom unit Cable Onda, the leading cable operator in Panama. This is the second transaction to close since Millicom announced in February an agreement to acquire the operating subsidiaries of Telefónica in Panama, Costa Rica and Nicaragua.  

By transaction type, TTR said, the biggest number of deals were M&A (826), followed by asset acquisitions (262), venture capital (238) and private equity (85).

BRAZIL, COLOMBIA SEE RISE IN NUMBER OF TRANSACTIONS

Among the six major markets tracked, the biggest number of transactions in January-August (795, up 2%) was recorded in Brazil.  

The biggest deal in Latin American's No. 1 economy last month involved Brazilian power holding CPFL Energia buying, for US$983mn from its parent State Grid Brazil Power Participações, shares in renewables-focused subsidiary CPFL Renováveis.

Last year Chinese utility State Grid, which controls State Grid Brazil Power Participações, completed the purchase of a US$4.5bn controlling stake in CPFL Energia. The transaction reinforces State Grid's growing status as one of Brazil's biggest power sector players.

Over January-August, Colombia saw the number of deals rise 19% to 133 and aggregate reported value climb 127% to US$4.70bn, while Chile, Argentina, Mexico and Peru saw deal numbers drop.