M&A activity in Mexico showed signs of reactivation in July, with 20 transactions valued at US$749mn, led by nine deals in the internet segment and eight in the finance and insurance segment, according to research firm Transactional Track Record (TTR).

These sectors also register most activity from January to July. Both the internet and finance/insurance sectors each recorded 28 transactions – including M&A, private equity, venture capital and asset acquisitions – of a total of 152 deals.

The pandemic has still had an impact, with overall deal value down 42% year-on-year to US$4.72bn.

UBER/CORNERSHOP 

One of the most followed transaction in July was Uber’s US$459mn acquisition of online grocery delivery service Cornershop’s Mexican and Chilean operations.

Matías Zegers, partner at DLA Piper Chile, the legal advisory for the Chilean side of the deal, sees a strong focus on these areas as activity begins to improve.

“The tech sector in general has been a highlight during the pandemic, as a significant number of [companies] have seen an extraordinary demand for their products and services in multiple verticals, gaining traction and therefore having higher valuations and attracting investment not only from VC firms but also from CVC and family offices,” Zegers told TTR.

“In fact, many of them have taken the opportunity to raise money to be sure they have enough runway to keep growing in these troubled waters,” he added. Zegers, however, believes the improvement is influenced by COVID-19 and its impacts.

“A significant number of deals were in a stand-by mode in March-April with only the deals that were in a later stage moving forward,” he said. “However, since then the activity and interest has grown…mainly because targets are cheaper now, creating an increased pool of opportunities and also because companies, after the initial shock, have restarted their ‘normal’ operations.”

CROSS-BORDER ACTIVITY

Looking at outbound activity for the first seven months of 2020, Mexican companies have mainly targeted investments in the US, with 13 operations, followed by Spain, with eight. Value was highest with outbound deals to Spain at just over US$1bn.  

With inbound deals, US firms have shown the strongest interest, generating 37 operations through July, up 15.6% year-on-year, followed by Canada and Chile with nine and seven transactions, respectively. By amount, the inbound deal value from the US stands out at nearly US$1.1bn.

PRIVATE EQUITY, VENTURE CAPITAL, ASSET ACQUISITIONS

Private equity activity has been weak, according to TTR, with only seven operations from January to July, although capital involved amounted to US$178mn.  Though there were 36% fewer private equity transactions in the period, the cumulative amount increased 164%. 

TTR has recorded 51 VC operations with an aggregate amount of US$389mn, an increase of 16% in the number of operations and a decrease of 14% in total capital supplied.

There have been 37 asset acquisitions with total value of nearly US$1.6bn, an 18% decrease in the number of transactions and 43% drop in value.

Source: Business News Americas / BN Americas - Chile