Brazil M&A And Private Equity Forum 2017

August 8, 2017 | Tivoli Mofarrej, Sao Paulo

Welcome to Mergermarket's Annual Brazil M&A Forum!

The Brazilian economy continues to bounce back as lower rates in interest and inflation have given a boost to Latin America's largest economy. Acquisition opportunities abound from favorable equity valuations thanks to currency depreciation and other factors while the effects of stabilized oil, gas and raw material prices imbue investors with confidence. Markets also let out a collective cheer after public officials proposed much needed reforms.

Market observers are expecting continual consolidation in the energy market, albeit at a slower pace from previous years, and in the business service subsectors, education, healthcare, I&C and consumer/retail segments. Foreign investors are also seen as accelerating the tempo at which Brazilian firms get acquired. Global transactions with Chinese buyers reached a record high of USD 208bn, of which Latin American accounted for 7.6% of those deals last year.

Agenda

*Please note, this event will be conducted in Portuguese.

Registration and Coffee

Opening Remarks

Amazonian M&A Prospects Brighten

In 1Q17, the economic powerhouse of Brazil saw 66 deals worth US$ 8.2bn, up 22.2% in value compared to Q1 2016, despite three fewer deals, which was a 4.3% drop compared to Q1 2016. The country dominated the region in Q1 2017 with a 61.9% market share by value. According to Mergermarket data, the engines of M&A growth came in the business services and industrial & chemical sectors, registering 14 and 15 deals, respectively.

Listen to panelists discuss the opportunities and risks associated with Brazilian M&A investments including:

  • All cash vs. all stock M&A deals – examining opportunities among companies trading at discount to book value and other trending, favorable metrics.
  • Examining what various leading indicators are telling investors about Brazil's economy over next 12 months?
  • What investor opportunities and challenges are emerging from the Real's continued depreciation?
  • Analyzing Brazil's advantages over the other large emerging economies of Russia, India and China as a destination for investment.

Coffee Break

EMU Sector Continues Track Record of Consistent Deal Making

The largest South American deal of 2016 was for a 23% stake in Brazilian electric utility company CPFL Energia, which State Grid Corporation of China bought for USD 12.4bn in September. The deal signaled healthy investor appetite for Brazilian assets, especially in the EMU sector which registered 32 deals for a whopping USD 30.5bn. No other sector came close to this valuation in 2016. Mergermarket forecasts indicate the EMU sector will continue to attract M&A and capital over the next year. In 1Q17, the acquisition of a 5.1% stake in Vale SA, the global mining company, by Valepar SA that was worth USD 1.9bn and ended up as the second-largest transaction out of the top five deals in Central & South America.

Panelists will discuss risk and reward in one of Brazil's most lucrative and consistent markets.

  • Examining what opportunities remain in the Brazilian energy market?
  • What assets will go to auction from Petrobras' recent selling-spree?
  • Assessing how foreign investors are shaping deal flow and impacting valuation in Brazil? How far in the future will these trends continue?
  • Discussing recent developments in mining.

What Opportunities Will Emerge From Reform

As the Brazilian economy stages a comeback legislators are working on certain reforms that include fiscal measures and changing the pension system. These reforms will have big implications for the economy as some sectors could be seen as flourishing and others losing, such as Construction and Infrastructure.

Listen to panelists discuss how political reform will impact the markets and economy.

  • Recent developments in crafting reform-minded legislation.
  • How will fiscal reform impact Brazil's infrastructure development? Will private funded projects rise?
  • Assessing impact of pension reform on overall economy.
  • How will construction industry take shape post-Odebrecht?
  • Examining impact from pending legislation that would allow foreign firms to take 100% ownership stake in Brazilian airline companies.

Lunch

Acquirers Go Shopping in Brazil's Consumer Retail Industry

M&A interest in consumer product businesses utilizing a subscription model and offering personalization features is on track to continue into 2017, with both strategic and financial sponsors expected to be active acquirers in the space. Competition between sponsors has made deals more expensive in consumer categories, while strategic consolidation continues to drive the retail space. Personal care, consumer packaged goods, and food and beverage continue to be the hottest segments, as demonstrated by the third largest 1Q17 deal when Heineken NV acquired beverage retailer Brasil Kirin Holdings SA for USD 1.1bn

Delegates will listen to panelists discuss market dynamics and deal making in the Consumer-retail subsector.

  • As competition intensifies how are midcap players sourcing deals in family-run consumer-retail businesses?
  • Assessing how much further will Brazilian retail consolidate?
  • Analyzing opportunities in the food and beverage market segment.
  • What technologies are retail businesses investing in to try to stay apace with market disruptors?

Outlook on Brazilian Buyout Opportunities

Private equity buyout firms continue to shop for their favorite Brazilian assets in the Consumer, Business Service and EMU sectors. Last year, the largest buyout (USD 5.2bn) consisted of a Canadian based consortium led by Brookfield Infrastructure Partners that took a 90% stake in gas pipeline firm Nova Transportadora do Sudeste. Interestingly, this deal symbolized one of the main M&A trends in Latin America – the ongoing rise of cross-border activity. Inbound deal making grew 46.3% by value last year while domestic M&A slid lower in 2016, falling 31% in value to USD 22.3bn.

Panelists will discuss private equity activity and opportunities throughout Brazil.

  • Assessing credit market conditions impact on Brazilian buyouts.
  • What subsectors are ripe for buyouts over the next 12 months?
  • How much foreign GP appetite is there for Brazilian energy infrastructure?
  • Mining prospects for buyout funds.

Conclusion of Event

*Agenda is subject to change

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Venue details

Tivoli Mofarrej
Alameda Santos
1437 - Cerqueira César
São Paulo - SP, 01419-001, Brazil