Dealmaking activity in Chile and Peru has lost steam this year, but a closer inspection of the data reveals that two segments have bucked the trend, as investors eyeing other industries circle.

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

The two nations saw double-digit drops in both deal volume and total aggregate value through June 9, as the fog of uncertainty continues to swirl through the region.

Data reveal, however, that the technology and internet sub-sectors are proving resilient in Chile and Peru. 

CHILE
In Chile, technology and internet led M&A activity by deal volume, which rose 120% to 11 and 100% to 10 transactions, respectively, over the period, according to data from research firm Transactional Track Record (TTR). 

Chile recently saw locally based online grocery provider Cornershop given the green light to sell a majority stake in its business to ride-hailing firm Uber. 

Elsewhere in the region, the online grocery/food segment has also proven a bright spot amid the dealmaking gloom in Mexico and Colombia.

Other segments in Chile expected to remain buoyant include healthcare and energy, Paulo Larrain, a partner at global law firm DLA Piper, said in an Andean region-focused TTR report.

“We see foreign investors analyzing possible investments in energy deals, in solar and geothermal,” said Larrain, who added that Chinese players were active in Chile and beyond, with no plans to exit the region.

“The Chinese are very important players in greenfield investments and M&A, with a lot of resources behind them; so much so that it’s difficult to compete,” Larrain said.
Larrain said dealmaking activity should start to accelerate from next quarter.
Through June 9, Chile saw 69 deals, down 39.4% year-on-year, while total aggregate value fell 67.1% to US$1.37bn.

PERU
In Peru, meanwhile, internet was the leading sub-sector through June 9, with five deals reported, up 66.6%.

This includes e-commerce, which has grown apace in Latin America amid strict quarantine restrictions in countries including PeruOverall, transactions involving family-owned businesses are on hold, while those involving EU or Asian investors have started to get underway again, Eduardo Campos, a partner at local consultancy Apoyo Finanzas Corporativas, said in the report.

Investment funds are active in the country, with those hunting bargains on the prowl.

“We are starting to see funds seeking distressed assets become more active,” he said, adding that infrastructure funds were also looking to participate in operational concessions in Peru and beyond.

On the infrastructure front, regional financial services heavyweights Sura and Credicorp recently announced they had launched an US$86.5mn infrastructure equity fund that will target the Pacific Alliance trading bloc nations of Chile, Colombia, Mexico and Peru.

On a regional level, infrastructure, energy and mining assets are priced low, BNamericas was told recently.  

Through June 9, Peru saw 27 deals, down 63% year-on-year as total aggregate reported value fell 75.6% to US$570mn.

Source: Business News Americas / BN Americas - Chile