Deal Pulse - 1H17 M&A Forecast

June 2017
Deal Pulse - 1H17 M&A Forecast
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After a tense presidential campaign in the US, Latin American observers have shaken off the post election jitters as they get on with business, while remaining tuned in to the season's latest reality shows with concerned amusement. 

With Michel Temer under investigation and protests in the streets of Brazil, near political and financial collapse pushing Venezuela ever closer to the brink and elections around the corner in Mexico and Chile, the US hardly takes center stage. To say there may be speed bumps ahead, in the words of Nexxus Capital Senior Manager Arturo Saval, may be an understatement. 

Oil continues to hover around USD 50 a barrel and hasn't recovered significantly compared to 2014 peaks, but Brazil and Mexico are pushing ahead with major exploration and production plans nonetheless. Notwithstanding its shaky political situation, Brazil kicked off its first oil and gas auction in years in May. Mexico will also lure international E&Ps to upcoming oil block auctions in the months ahead.

The energy landscape has changed irreversibly as renewable tenders carve out an ever-larger share of the market for green energy across the region, bringing greater competition and disruption to the conventional power market. Mexico's successful energy reform has cemented a new paradigm that will invariably influence norms adopted in the months and years ahead by its neighbors to the south.

M&A is picking up across Latin America at a modest pace, tempered by sluggish GDP growth in most markets and political headwinds facing many. Deal volume and aggregate transaction value were up 13% and 301%, respectively, in the first three months of 2017 across the region, relative to the corresponding period in 2016. Growing deal volume in the first three months of 2017 followed a steady upward trend throughout 2H16. In 2H17, deal volume can be expected to build on gains realized in the previous year, and based on 1Q17, regional aggregate value will exceed last year's.

Clearly seasoned investors are accustomed to Latin America's political and economic hiccups and can't be easily dissuaded from targeting the region's most compelling industries. Services, technology, media and telecom, industrials, real estate, construction, energy, natural resources and infrastructure assets are on the radar of strategic and private equity buyers from North America, the EU and Asia. 

Services and distribution represented 571 of a total of 1,291 deals, or 44%, of all announced and closed transactions in 2H16 region wide, suggesting the demographic basis for a bullish Latin America outlook is well justified.

This Report includes:

- Latin America Overview

- Private Equity Insights

- TTR Intel Volume

- Brazil & The Southern Cone

- Mexico & The Pacific Alliance

- Central America & The Caribbean