The sectors powering Chilean M&As

Dealmaking in Chile accelerated in January-August, with the financial services and technology industries accounting for the bulk of transactions.

The country saw 214 deals involving US$11.5bn, up 52.9% and 374% year-on-year, respectively, according to a data report shared with BNamericas by research company Transactional Track Record (TTR). Value was disclosed for 124 deals.

Financial services and technology each generated 50 deals, with distribution and retail in third with 23. All registered low triple-digit growth year-on-year. 

The trend was reflected in a report on M&A activity in the Andean region – Chile, Colombia and Peru – produced by Chilean financial advisers Hudson Bankers.

The company said that Chile was outperforming its Andean peers, with Chilean M&A activity up 282% year-on-year in June-July and up 75% compared with 2019 levels. In the year-on-year comparison, Peru saw near 0% growth and Colombia 67%.

Alex Nilsen, M&A adviser at Hudson Bankers, told BNamericas: “Chile is proving its resiliency in M&A as it continues to attract local and international investors which include both strategic and financial profiles. Within emerging markets, Chile continues to be one of the most attractive environments for M&A, and one should expect global financial and industry leaders to continue executing M&A strategies that start in Chile and expand outwards.”

Energy is also consolidating as a key M&A sector this year, said Hudson Bankers, citing as an example the US$41mn purchase of hydroelectricity generator Empresa Eléctrica Licán by Canada’s Innergex. Licán has an 18MW run-of-the-river plant in Los Ríos region. Innergex has also obtained full control of Chilean renewables player Energía Llaima, via a US$71mn purchase of the remaining 50% interest in the company, which has a portfolio of solar and hydroelectricity assets and projects.

A shift away from coal-fired generation and toward renewables by AES Andes has helped spur M&A in the country. 

The forestry sector, meanwhile, has played a role on the M&A stage recently, with investment bank BTG Pactual making a previously announced US$344mn purchase of 80,000ha of forest land, via a consortium led by BTG forestry asset manager Timberland Investment Group, Dutch pension fund APG and Canadian institutional investor British Columbia Investment Management Corporation.

US investors are the main purchasers of Chilean companies, acquiring 46 in January-August, up 119% year-on-year, according to TTR data. Technology and internet-focused companies attract the most foreign investors, which acquired 35 over the period, up 75.0%.

Dealmaking accelerated in Chile over the first half of the year. Activity was stronger than in the corresponding period of 2017 and 2019. Pandemic-related restrictions partly snarled the wheels and cogs of dealmaking in the first half of 2020.

Latin America, TTR said, saw 2,084 deals in January-August, with value disclosed for 1,031 and totaling US$100bn. Number of deals was up 36.9% and value 176%.