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Deal Trends in Latin America, Issue #11

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Deal Trends in Latin America, Issue #11

Highlights

Latin American deal volume increased by 7.7% in 2019 compared to 2018.

Brazil continued to be the most active region by volume and size, announcing 466 transactions worth over $32.5bn USD.

Information Technology continued to be the primary driver of transaction volume; however, this sector had the lowest aggregate deal value in 2019. From a total deal value perspective, Industrials, Utilities, and Energy were the top players in the space.

An increase of deal activity with a decrease of deal value

In 2019, 884 M&A’s and private placements representing $78bn in total transaction value were announced. This represented an increase of 7.7% in deal volume but a decrease of 5.88% in deal value compared to 2018. Although annual deal value is at the lowest in the past 4 years, we saw a record high number of deals.

The first half of 2018 had a notably higher total deal value than the first half of 2019, $55mm and $35mm respectively. Inversely, in the second half of these two years, total deal sizes were $28mm and $42mm respectively. The difference resulted in an average reduction of $12mm per deal from previous year. In 2019, there were 14 transactions with deal size greater than $1bn. Although a slight increase from 13 deals in 2018, this number has dropped from previous years – 18 deals in 2016 and 19 deals in 2017.

The largest M&A transaction in 2019 was recorded at $6.7bn – Sendas Distribuidora S.A.’s acquisition of Almacenes Exito S.A. (an all cash deal in the Consumer Staples sector in Colombia). Comparatively in 2018, the largest deal size recorded was significantly larger at $16.3bn – Suzano Papel e Celulose S.A.’s acquisition of Fibria Celulose S.A. (Materials). Once again, this shows a dip in deal size in 2019, suggesting that although there are more deals in 2019 compared to previous years, investors are investing less money per deal and in total.

Similarly, the largest private placement in 2019 – Series E Funding into Rappi S.A.S.  (Consumer Discretionary) – recorded at $1bn is notably smaller than the largest private placement in 2018 – a deal recorded at $5bn (Financials/Insurance).

Deal Trends in Latin America, Issue #11

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