Mexico M&A and Private Equity Forum 2017
November 14, 2017 | Mexico M&A and Private Equity Forum
Acquisition opportunities have proliferated in Mexico thanks to a steadfast commitment to economic liberalization and reforms encouraging foreign investment. Nowhere is this more obvious than with the domestic energy sector. Since opening the oil and gas industry to foreign capital and development in 2014, five auctions have taken place. The most recent, in June, saw 10 oil exploration and production contracts awarded to bidders that include some of the world's major oil companies. More auctions are expected as early as April 2018, when the government will auction concessions for 35 offshore areas. Running a USD 321m current account deficit, domestic firms will look to finance productivity improvements in the transportation, manufacturing, consumer, power and energy sectors.
The enactment of liberalization policies and other reforms over the last few years have prompted cautious investors to shrug off concerns around Peso volatility, cartels and political relations with its northern neighbor. In fact, Credit Suisse recently revised its projections for 2017 Mexico GDP expansion to 2.4% from 1.7%. In a Mergermarket DealDrivers publication that surveyed industry practitioners, many predicted an acceleration of M&A activity in 2H17, especially in the mid-market segment of the economy.
Please join the Mergermarket team and esteemed panelists in this exploration of investment and M&A opportunities throughout the Mexican landscape.
Registration and Breakfast
Presentation: How can M&A deal with today’s demands while activating your digital tomorrow?
How Changing Economics Will Affect Mexican Dealmaking
In 2H16, a volatile MXN/USD exchange rate riled many dealmakers with fewer halting M&A offers altogether. However, in 1H17 the Mexican currency staged a comeback gaining 13% against the Greenback and giving a boost to M&A activity.
Panelists will discuss how Mexico's macroeconomics and policies will impact M&A dealmaking over the next 12 months, including but not limited to:
- Which sectors will feel the pinch from the government's spending reduction plan that aims to tackle the fiscal deficit?
- What does growth in imports, inflation, equity markets, currency appreciation, interest rates and current account deficit mean for foreign investment and M&A?
- How will a resurgent US economy create opportunities for foreign investors in Mexico?
- What regulatory reforms lie on the horizon that will impact M&A transactions?
- How are investors positioning themselves for the upcoming 2018 elections?
Coffee Networking Break
How Are Foreign Investors Sourcing Deals?
Businesses and assets in the consumer, financial services, industrials, leisure, power and energy sectors represent some of the best opportunities throughout Mexico. High demand and competitive auctions in the O&G and electricity markets, which both feature low production costs, existing infrastructure, and an investor-friendly regulatory framework, will ensure dealmaking continues at a fierce pace. For instance, UK-based developer Solarcentury has bulked up its PV project pipeline from 100MW to 500MW in Mexico from its ECOSolar acquisition from an April auction. Additionally, supply of investment opportunities in conventional power assets is expected, recently demonstrated by US-based generator InterGen, which is looking to sell 2,200MW energy portfolio in Mexico.
Panelists will discuss what sectors and assets M&A and private equity teams will be assessing over the next 12 months, which will include but not be limited to:
- Will the Mexican tech industry get a boost from international tech outsourcers as the US administration looks to restrict H-1B visas?
- Will Mexican manufacturing continue to hold the top spot for international investment over next 12 months, especially in light of currency exchange rates?
- What factors should investors consider in potential opportunities for consumer retail and food M&A?
- What are important differences in offshore exploration and production between Mexico and Brazil that investors should be aware of?
- Assessing revenue, profit margins, inventory levels, degrees of leverage, credit market access, cost of capital, productivity, supply and demand elasticity, and market structure of favored sectors.