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M&A in Latin America

Our comprehensive look at M&A trends in Latin America

For decades, Latin American countries have been a promising venue for global companies seeking to leverage the region’s rich natural resources, low-cost labor markets, and, more recently, expanding consumer markets.

The M&A activity in Latin America in 2017-18 was driven by improving macroeconomic conditions, rising government support, and increasing consumption. The Energy & Resources industry attracted many of the investments (USD 55 bn)7 in 2017-18 because of the abundance of natural resources in the region. Brazil witnessed the highest number of deals (639) and accounted for significant investments (USD 63bn) owing to its reviving economy and vast consumer base.

M&A trends in Latin America

  • In 2017, M&A activity in Latin America was driven by improving economic growth and rising consumption. Many Latin American countries have rich resources that drive investments in the Oil & Gas and mining sectors. Increasing disposable income and government reforms further stimulate M&A activity in the region.1- 6
  • Brazil’s growing GDP, increasing consumer spending, and business-friendly policies help boost investor confidence, thus attracting investments.9,10
  • Chile’s favorable GDP growth, emphasis on public spending, and increased outputs from the mining sector benefit the investment climate in the country.3,17,18

Industries

  • Over 2017-18, Energy & Resources (E&R) registered the highest M&A activity (deals worth ~USD 55 bn).7
    • Increased investments in copper, followed by lithium and gold, generated the high level of E&R activity in the region.25,26
  • Consumer & Industrial Products (C&IP) recorded deals worth ~USD 30 bn over 2017-18, owing to a rise in disposable income.7
  • M&A in Financial Services was primarily driven by the growth in the insurance sector, while that in Technology, Media, and Telecommunications (TMT) was mainly attributable to a rise in IT consulting services.32

Geographies

  • In 2017-18, the majority of M&A activity in Latin America was intra-regional, with economies such as Brazil, Mexico, and Chile being the top investors as well as top investor destinations in Latin America.7
  • Outside the region, North America (especially the United States) and Europe (countries such as Spain and the United Kingdom) were the top investors in Latin America’s inter-regional deals, as companies from these economies look to capture investment opportunities in developing markets.7

Challenges

  • Overdependence on commodities, and volatile oil and commodity prices could restrain M&A activity in Latin America.1- 6
  • Political uncertainties, corruption, and the lack of adequate infrastructure could also weaken market perception, thus affecting M&A activity.1- 6

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M&A trends in Latin America
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