Oil and gas mergers and acquisitions in Brazil will keep the segment dynamic next year, driven by state-run Petrobras' divestment plan and government efforts to attract new players to the sector. 

“Petrobras already announced its strategic plan for the period between 2020 and 2024 and it is clear that it intends to continue with its divestment plan on several fronts such as refining, thermal plants, offshore pipelines, among others," Wagner Marques Rodrigues, research and business intelligence director at consultancy Transactional Track Record (TTR), told BNamericas.

Petrobras expects to raise US$20-30bn between 2020 and 2024, with most of the sales planned in the first two years.  

Countrywide, M&A transactions were up 10.2% year-over-year from January to November, reaching 1,217 – including venture and private equity transactions, according to TTR.  

Meanwhile, reported deal values reached nearly 276bn reais (US$67.3bn), up 57.8%, underscoring rise in values during the year.

Of the five most valuable operations, three were linked to the oil and gas segment. 

The largest M&A deal was the US$16bn sale of two blocks offered in the Búzios field in November's transfer-of-rights surplus auction, with Chinese companies CNODC and CNOOC plus Petrobras as buyers. 

While Petrobras was buyer and seller this year, in 2020 the company will focus more on selling, which could attract global and private sector players, as interest remains high even though clean energy is coming into focus.

And the government is still pursuing a plan to reduce the role of state-run players in several segments.

“Although it is true that companies and investors are looking with more interest to the clean energy area, the oil segment will continue to be important in the portfolio of global investors. Most clean energy projects become reality after 2030, so the reign of the oil industry will continue through this period,” Luiz Octavio da Motta Veiga, a former president of Petrobras, told BNamericas recently.

OTHER SECTORS 

Other important M&A segments in 2020 will be technology and finance.

“In terms of deals, technology will continue to play a key role as companies need to keep optimizing in all areas by applying new technologies,” TTR's Rodrigues said. 

While oil and gas transactions involved the highest values, though, technology and finance lead in numbers because multiple small and medium players operate in the market. 

From January to November, 302 technology deals were closed and 181 in the financial and insurance segment, according to TTR. 

Local investment firm XP Investimentos is leading fintech consolidation in the country.

The firm recently raised US$2.25bn from its IPO and will use the proceeds, among others, to finance future acquisitions.

“XP has room to expand in Brazil, via acquisitions, and is also likely to eye an expansion across Latin America since they already have a respectful position in the brokerage segment in Brazil,” Luis Santacreu, a banking analyst at local rating agency Austin Rating, told BNamericas.

Source: Business News Americas / BN Americas - Chile