Mexican October M&A deals up in value

October M&A activity in Mexico picked up in terms of deal valuation, with 19 of the month's 24 transactions disclosing values totaling US$2.05bn, up 22.4% from the disclosed sum in October 2016, according to research firm Transactional Track Record (TTR).

While the number of transactions in October was unchanged year-on-year, the valuations helped offset what has been a lackluster year for deal making in Mexico, overshadowed by the uncertain future of Nafta.

From January to October, there were 237 M&A deals in Mexico, 2.47% less than in the same period of 2016, when 109 operations were reported with disclosed deal values totaling US$14.8bn – an 18.3% year-on-year decline.

Key deals for the month

TTR highlighted the sale of Chicago-based East Balt Bakeries to Mexican bread giant Grupo Bimbo for US$650mn. Announced in July, the deal closed in October after regulatory approval and represented a significant expansion of Bimbo's global footprint and advance into the US market.

Two energy sector deals also closed in October. Italy's Enel Green Power sold its 80% stake in three solar plants and five wind projects to Canadian institutional investor Caisse Depot et Placement du Québec and the investment arm of Mexican pension fund CKD Infraestructura México for US$1.35bn.

Also, IEnova, a subsidiary of Sempra, purchased a 25% stake in the Ramones II Norte gas pipeline from federal oil company Pemex for US$231mn.

Cross-border trends

Outbound M&A deals from Mexico in 2017 have largely targeted the US and Colombia, resulting in 15 and seven transactions, respectively. Disclosed values for outbound deals to the US total US$2.65bn.

Inbound deals this year have largely originated in the US (30), Spain (15) and the UK (8). Deals inbound from Canada, however, generated the highest reported valuations at US$1.84bn, with the US next at US$863mn.

Private Equity and Venture Capital

TTR reported 31 private equity operations in Mexico in the first nine months, with 11 disclosed values totaling US$2.64bn, representing a 24% year-on-year increase in the number of operations but a 10% fall in disclosed values.

The firm also reported 43 venture capital operations in the period, with 20 disclosed values totaling US$365mn, a 34% increase in operations and a 124% jump in reported values.