Foreign infrastructure and private equity funds have Chilean assets in their crosshairs, according to an investment bank chief.

Negotiations are underway and deals expected to close as coronavirus fallout squeezes prices in the country – already an attractive jurisdiction, a safe bet, in the eyes of investors because of its stability and favorable regulatory environment.

“With the fall in prices that we’re seeing, investing in Chile –  even with a discount – is very attractive for many North American, Canadian, European and Asian infrastructure and private equity funds,” said Federico Ravazzani, head of Brazilian investment bank Itaú BBA’s Chilean unit.

“We’re already seeing it and I think that, in the coming months, there will be various announcements of purchases made by these types of investors in Chile,” Ravazzani said during a Visión de Líderes webcast hosted by Itaú.

Fallout from the pandemic has partly snarled M&A wheels and cogs across Latin America, as some sellers embrace caution in an unfavorable environment that is in constant flux and hampering face-to-face talks.

Latin America’s pipeline of M&A deals comprises strategic divestments started prior to the health crisis as well as those stemming from the financial squeeze it has generated.

Companies that demonstrate resilience and capacity to bounce back strongly following the pandemic are particularly sought after, the webcast was told.

In Chile, while the bulk of prospective buyers are foreign, local groups are “actively looking” at opportunities, Ravazzani (pictured) said, adding that Peru and Colombia were also blinking brightly on the radars of investors.

Foreign private equity players, meanwhile, are sitting on a mountain of dry powder capital and looking at how to deploy it.

Michael Cullen, an expert in cross-border deals at the Colombian office of global management consultancy FTI Consulting, told BNamericas recently that various sectors were attractive.

“Obviously the distressed markets, the ones most adversely affected by the immediate quarantines imposed here in Latin America [such as tourism],” he said. “They are going to be on everyone’s radar; they are going to be obtainable at extraordinarily low prices. But there’s obviously a risk associated with that, which is the continuation of the COVID-19 crisis.

“But I think the more mainstream industries that we’re seeing private equity take an interest in are infrastructure, energy and mining. All three of these industries at the moment are priced low.”

In Chile, investors are eyeing segments including solar and geothermal, Paulo Larrain, a partner at global law firm DLA Piper said in recent report from research firm Transactional Track Record, adding that Chinese players with deep pockets were looking for opportunities.

Source: Business News Americas / BN Americas - Chile