Lacklustre Latin America M&A in Q1 2018

Argentina, Brazil propped up Latin American PE and VC value

The volume and value of mergers and acquisitions (M&A) targeting companies in South and Central America totalled 144 deals worth an aggregate USD 12,594 million in the first quarter of 2018, according to information collected by Bureau van Dijk, a Moody’s Analytics company, and the leading publisher of company information. Volume weakened over the three months to continue forming a series of peaks and troughs while value reversed three consecutive quarters of growth by almost halving from USD 24.568 million in Q4 2017.

Bureau van Dijk’s research shows that Oi, Brazil’s largest fixed-line operator, accounted for Latin America’s largest deal by value in Q1 after undertaking a capital increase for the capitalisation of credits that will result in an issue of new shares worth as much as USD 3,788 million. This was one of only two deals worth more than USD 1,000 million and together they comprised 38 per cent of the quarter’s total value. The second-largest deal featured Banesco Banco Universal of Venezuela announcing plans to raise USD 1,001 million to fund growth.

Bureau van Dijk’s data shows that private equity and venture capital (PE and VC) investment in the region totalled deals with a known aggregate value of USD 551 million, compared with 50 deals worth USD 2,525 million in Q4 2017. Value in Q1 2018 remained marginally higher than Q1 2017 and Q1 2016 due to two PE and VC deals each worth more than USD 100 million and which, together, accounted for 83 per

cent of the quarter’s total. The majority of the top 20 PE and VC deals by value in Q1 targeted companies focused on developing online platforms for payment instalment processing, workflow management, lending, cryto-currency exchanging and crowdfunding, among others.

Lisa Wright, director at Bureau van Dijk, commented,

“Acquirors and investors have put the brakes on high-value spending sprees in Latin American companies following a frenzied spate of dealmaking in the last two quarters of 2017, though we shouldn’t be too disheartened as records show the first quarter of the year is generally quieter. It is interesting to see investors targeting sectors other than Latin America’s energy industry; Q1 saw them supporting the region’s digital transformation by taking part in funding rounds by companies involved in online mobile payment platforms or cloud-based workflow management.”