Sustained interest in Brazil and Chile kept lawyers who practice in Latin America busy with mergers and acquisition work in 2020 as foreign investors largely pulled back from the region amid concerns over COVID-19.
League tables compiled by Mergermarket show that Brazilian law firm Pinheiro Neto Advogados led activity in Latin America by both number and value of deals, having advised on 67 mergers and acquisitions worth $23.5 billion last year. That deal activity represented a 20% increase on the year by value for the firm; Pinheiro Neto ranked second by value in 2019.
Davis Polk & Wardwell ranked second in the league tables by deal value, having handled four M&A transactions worth $20.3 billion in 2020—a 142% spike on the year. Bermuda-based ASW Law clinched third place, after having not ranked at all in 2019. Last year it was involved in the $15.3 billion reorganization of Brazilian sugar and ethanol company Cosan. That deal was announced in December.
Pinheiro Neto and Davis Polk are also working on the Cosan reorganization, which contemplates a first-time listing of American depositary shares by the company.
“The Latin American M&A market was bruised but not broken.”
All told, there were 557 deals announced in Latin America last year, worth $56.8 billion—down 34% by value compared to 2019, according to Mergermarket.
The deal tracker noted that activity picked up in the region during the second half of 2020, when 321 deals were announced worth $47.6 billion. Announcements during the second half of the year represented a 416% increase by value compared to the first half.
“The Latin American M&A market was bruised but not broken” by the pandemic, said Philip Segal, head analyst for the Americas at Mergermarket.
Despite healthy private equity activity from global sponsors, Mergermarket notes that foreign investment in Latin American countries declined last year to its lowest level since 2003.
Investors hit the brakes as the region’s biggest economies suffered some of the worst per-capita fatality rates in the world from COVID-19. Countries such as Chile enacted strict lockdowns and barred non-Chileans from entering, while Mexico kept doors wide open to international visitors.
Many investors were wary of travel necessary to “kick the tires” on potential acquisitions, while also showing concern about the business climate in Mexico, where President Andrés Manuel López Obrador has halted several private sector projects, especially in the energy sector.
Mergermarket said that Mexico and Colombia—respectively Latin America’s second- and third-largest economies—experienced sharp declines in deal activity. There were just 54 deals worth $1.2 billion struck in Mexico last year, an 89% decrease by value versus 2019, and only 35 deals worth $1.5 billion in Colombia, down 84% by value.
Meanwhile, activity by value in Brazil was flat at $39.8 billion, while deal value increased in Chile by 12% to $10.6 billion.
These shifts in interest by geography sent Chilean law firm Claro & Cia. higher in the rankings, while dinging results for Mexican M&A stalwart Creel, García-Cuéllar, Aiza y Enríquez, S.C.
Looking ahead in 2021, Segal sees a Latin America M&A market that is “poised for growth,” particularly in the technology sector.
Law firms are gearing up for more activity, especially in Brazil. This week, Hughes Hubbard & Reed announced that it has lured a Brazilian partner to its New York office—one of several firms that have expanded their capabilities already this year in Latin America.
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