Brazil M&A activity surges despite raging pandemic, political upheaval
01/04/2021 15:42
By Tatiana Bautzer
SAO PAULO, April 1 (Reuters) - Brazil may be headed for a
record year for M&A deals despite the negative economic effects
of one of the world's deadliest COVID outbreaks and increasing
economic and political turmoil, bankers and lawyers say.
M&A volume almost quintupled in the first quarter of 2021
from a year ago, to $25.6 billion, according to Refinitiv data,
led by Hapvida SA's HAPV3.SA $9 billion proposed takeover of
rival healthcare provider Notre Dame Intermedica SA GNDI3.SA .
Brazilian markets turned jittery in March after president
Jair Bolsonaro decided to replace the CEO of state-controlled
oil company Petroleo Brasileiro SA PETR4.SA and backpedaled on
pro-market economic policies.
At the same time, deaths from the COVID pandemic have
surged, triggering lockdowns and reducing growth projections.
Yet even as the real currency came under fresh pressure,
with an 8% drop against the dollar in the quarter, the impact on
takeovers was muted.
"M&A deals are more resilient to volatility than share
offerings, we still expect them to grow this year," said
Roderick Greenlees, head of investment banking at Itau BBA.
Ricardo Lacerda, founding partner of investment bank BR
Partners, said 2021 may be a record-breaking year for M&A in
Brazil, but also cautioned, "extreme political and economical
volatility is worrying and is clouding the scenario for the rest
of the year".
Healthcare, retail, infrastructure, energy and for-profit
education were expected to be the most active industries. Bruno
Amaral, head of M&A at Banco BTG Pactual, expects more deals
involving fintech, with larger funding rounds and potential IPOs
of 'unicorns' - start-ups valued above $1 billion.
Brazil is also expected to see its first Special Purpose
Acquisition Company (SPAC) deals, as more of these vehicles
search for targets outside the United States.
In a hint of such activity ahead, Colombian softgel maker
Procaps S.A.S. has entered into talks to go public on Nasdaq
through a merger with one such blank-check company, Reuters
reported last month. urn:newsml:reuters.com:*:nL8N2LD5BU
IPOS COOLDOWN?
Volatile markets prompted some companies to delay their
plans to join what had been a growing queue of initial public
offerings (IPOs), such as office supplies retailer Kalunga and
homebuilder CFL.
The first quarter saw 23 share offerings, but their dollar
value fell 26%, partially due to the weaker currency but also
because Brazilian investors began to accept smaller offerings.
"Offerings now range from $100 million to $2 billion", said
Fabio Nazari, head of Equity Capital Markets at BTG Pactual.
Even with market turbulence, Nazari expects up to 80 offerings
in 2021, up from 61 last year.
Investors have become more selective about IPOs in
industries in which there are already many companies listed,
such as homebuilding, but many large Brazilian companies with
listing potential remain, said Tobias Stimberg, a partner at law
firm Milbank LLP.
BRAZIL M&A LEAGUE TABLE- Q1 2021
FINANCIAL ADVISOR RANK VALUE NUMBER OF
($MILLION) DEALS
ITAU UNIBANCO 15,616 8
JPMORGAN CHASE 15,519 4
BTG PACTUAL 15,225 8
CITI 11,227 3
XP INVESTIMENTOS 10,013 4
SANTANDER 7,013 4
BANK OF AMERICA 5,835 4
BRADESCO 5,768 5
BR PARTNERS 5,416 3
ROTHSCHILD 2,128 3
TOTAL 25,609 204
Source: Refinitiv
($1 = 5.6290 reais)
(Reporting by Tatiana Bautzer; Editing by Christian Plumb and
Sonya Hepinstall)
((tatiana.bautzer@tr.com; Tel: +55-11-5644-7756; Mob:
+55-119-4210-4173; Reuters Messaging:
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