Fibras shake off real estate slump for M&A in November

Just two major real estate deals, for US$872mn, made a dent in an otherwise slow M&A market in Mexico last month. Both these big deals in November were tied to Fibra investment vehicles.

One of those deals, the second largest of the month according to research firm TTR, was Fibra Uno’s acquisition of 74 real estate properties owned by industrial park developer Finsa – the US$822mn “Portafolio Titán". To that adds Fibra Educa’s purchase of nearly US$50mn in real estate holdings in San Luis Potosí state, which was the fifth biggest deal for the month.

As vehicles geared toward real estate and infrastructure development, Fibras have become more popular investment trust vehicles.

The security is similar to REITs traded in the US, and an industrial index for Fibras trading on the stock exchange (BMV) has seen a nearly 30% gain in the last year.

THIS YEAR

Overall, Transactional Track Record (TTR) reported that the number of M&A, venture and equity transactions from January to November fell to 29, a 40% drop from a year before.

M&A activity included 267 transactions in the first eleven months of the year, with 104 reported deal values amounting to US$18.3bn.

This implies a 24.6% increase in reported capital moved in deals but a 17.3% decrease in number of deals year-over-year.

TOP OF THE MONTH

The top deal of the month was related to infrastructure though, and involved two Canadian pension funds buying minority stakes in infrastructure firm IDEAL for US$2.59bn. The funds are the Toronto-based Cdn$410bn (US$309bn) Canada Pension Plan Investment Board and the Cdn$201bn Ontario Teachers' Pension Plan.

This deal followed transactions in 2016 and 2018 between IDEAL and the pension funds for investments in the Arco Norte and Pacífico Sur toll roads in Mexico.

CROSS-BORDER

TTR noted that most outbound deals from Mexico this year have targeted the US with 16 operations, followed by Spain with 12 transactions, and Colombia with seven registered deals. The largest deal amount was also recorded for the US, nearly US$1.18bn. 

Likewise, the US has been the source for the most inbound deals to Mexico with 59 operations, followed by Spain with 13 transactions, and the UK and Japan with seven operations each. By amount, the US stands out with US$3.71bn.

INTERNET AND TECH

The internet and technologies sector has dominated M&A activity in an otherwise mediocre 2019 with total deals January to November in the sector jumping 33% year-on-year to 40 and technology deals up 45% to 32.

By comparison, TTR reported 38 deals for the normally strong financial and insurance sector, representing a 33% decline.

Foreign acquisitions in the technology and internet sectors have been booming in recent years, jumping 30.4% this year to 30 (through November), after seeing 140% growth in 2018 to 24.

FINANCE

As of November, TTR has recorded 19 private equity operations for nearly US$2.66bn, which represents a 34.5% decrease for the number of operations and 12.4% less for capital involved.

VC, on the other hand, has registered 70 operations with an aggregate amount of US$1.31bn, an increase of 9.4% in the number of operations and almost 149% more venture capital raised. 

In the asset acquisitions segment, 72 operations occurred for a value of US$4.80bn, representing a decrease of 8.9% in the number of operations but a 17.5% increase in value.

Pictured: Real estate development in Cancún.