Brazilian Investors Go Global
Transcription
Brazilian Investors Go Global
corpfina Bulletin – Friday, 27 March 2015 Dynamic International M&A Activities from Brazil Brazilian Investors Go Global Frankfurt am Main, 27 March 2015 – In light of the economic situation in their home country, many Brazilian corporates and private equity investors are currently pushing forward international M&A activities. Transactions such as the planned takeover of Kraft Foods by 3G Capital seem to indicate a new phase of dealmaking. Oscar Sträter has been heading Banco Santander M&A team based in Frankfurt which recently expanded by basing Santander Global Retail Industry Group (M&A) in Frankfurt. In this respect, he frequently advises on Brazil-European cross border M&A transactions and now gives more colour on latest developments. In the past, Brazilian corporates and private equity in- zilian conglomerates and wealthy individuals are try- vestors were primarily focused on acquisitions in Brazil ing to diversify (outbound investments). Thirdly, the and the Americas – what drives the change, why are economic cycle could eventually lead to a new wave Brazilian investors now motivated to look for targets of foreign investors acquiring again into Brazil by tak- worldwide? ing advantage of a weak BRL and a long (not short- Sträter: The main driver of change is the deterioration of the economic environment. Today’s Brazil is different from Brazil in the last decade. The economy is under pressure which im- medium) term investment view on Brazil’s economic potential. In 2014, despite the downturn / election year, there were still 19 companies from the DACH region acquiring into Brazil (although some related to existing investments such as Celesio & E.ON) but also new investments such as Fresenius Kabi acquisition of Novafarma (advised by Santander). pacts M&A activity in vari- The Brazilian investment firm 3G Capital is currently ous ways: Firstly, domestic preparing the takeover of Kraft Foods. Do you expect M&A activity has come down further comparable acquisitions by investors from Bra- (BRA-BRA deals) given the challenging medium term zil to come in the near future? outlook. Secondly, a selective small group strong Bra- Sträter: Many Brazilian companies need to focus their resources on Brazil given the economic down Corporate Finance Association (corpfina) e.V. c/o Flick Gocke Schaumburg, Messeturm, Friedrich-Ebert-Anlage 49, D-60308 Frankfurt am Main 1 corpfina Bulletin – Thursday, 26 March 2015 turn. We expect investments abroad now to come from the larger and stronger Brazilian groups that already have an international footprint and are not too much impacted by the weaker domestic economy. These companies can afford to diversify abroad and are (looking) to do so in a focused way. Which industries are interesting from a Brazilian perspective? Chart 1: Number of cross-border M&A transactions Brazil/DACH region. Sträter: That depends on the industry: companies like Odebrecht (construction), WEG (capital goods), Are Brazilian private equity investors also interested in Vale (mining); Embraer (aviation) and Inbev (a Bel- cross-border M&A? gian company with predominantly Brazilian management) are truly global. In addition there is now a number of companies with an increasing global presence such in the meat sector JBS, Brazil Foods & Marfrig, Natura (acquired Aesop in Australia). Then there are also Brazilian champions such as Petrobras, Braskem, Carmarga Correa, Votorantim which also have sizable international presence. Sträter: The vast majority of Latin America Private Equity funds are divided in either Brazil or the Spanish Speaking countries. The Brazilian funds are usually exclusively focused on Brazil only given the size of the market (and unlike other Latam countries less synergies between these countries). A few exceptions are some large Brazilian investment funds which do invest internationally such as 3G (e.g. Burger King, the Which regions and countries are most attractive for recently announced Heinz –Kraft merger), Pensinsula Brazilian investors? (investment in Carrefour), and GP Investmentos (e.g. Sträter: In the DACH region we have seen invest- through its portfolio company Magnesita which has ments in Steel (CSN acquisition of Stahlwerke Thür- more than 65% of sales outside Brazil) which have in- ingen – advised by Santander), Chemicals (Bras- vested abroad. kem´s acquisition of PP plants in Schkopau & Which role do Brazilian family offices play in the inter- Wesseling in 2011) and Capital Goods (WEGs acquisi- national M&A market and what do you expect in terms tion of KATT and Württembergische Elektromotoren of this type of investors? GmbH, Watt Drive in Austria and Romi’s acquisition of Burkhardt + Weber). We do believe such strategic investments will be very selective and mostly focused on either acquiring technology and/or distribution capabilities. In other countries there are also acquisitions in other sectors such as for example in restaurants: IMCs acquisition of Margaritaville restaurants in 2014 and reverse Mercapital acquisition of a 70% stake in Brazilian´s high end restaurant group Rubayat in 2012 (advised by Santander). Sträter: Various large Brazilian investors intend to diversify their investments and also protect against the BRL which has significantly weakened. These investors generally look for relatively stable investments or investments with which they have affinity. A good example is a consortium of Brazilian investors in the acquisition of a regional dominant shopping center in Spain for EUR 62m (advised by Santander). Another is the owner of a large Brazilian retailer that invested a minority stake in a leading global duty free retailer. Corporate Finance Association (corpfina) e.V. c/o FGS, Messeturm, Friedrich-Ebert-Anlage 49, D-60308 Frankfurt am Main, [email protected] 2 corpfina Bulletin – Thursday, 26 March 2015 Why are Brazilian investors interesting partners – what can target companies, their management and owners expect? Sträter: Brazil is a very large dynamic market (Europe + 1/3) with a lot of competition and in the past also significant volatility. Brazilian companies that are successful usefully have seasoned managers that had to navigate through significant challenges and dynamic markets and would bring such experience with Chart 2: Number of domestic and cross-border M&A transactions related them. to Brazil. Contact at corpfina: Dr. Ruediger Theiselmann Phone: +49 69 907 458-22 Email: [email protected] Design: RuppertiPlus Agentur für Marketing und Kommunikation GmbH, Frankfurt am Main www.ruppertiplus.de Corporate Finance Association (corpfina) e.V. c/o FGS, Messeturm, Friedrich-Ebert-Anlage 49, D-60308 Frankfurt am Main, [email protected] 3