DURING THE FIRST MONTH OF THE YEAR THE AUTOMOTIVE, REAL ESTATE AND ENERGY INDUSTRIES SHOWED HIGH DYNAMISM IN THE ANDEAN REGION
THE M&A MARKETS IN THE ANDEAN REGION SHOWED INTENSE ACTIVITY DURING JANUARY. AN IMPORTANT TRANSACTION IN THE AUTOMOTIVE DISTRIBUTION SECTOR TOOK PLACE IN CHILE, IN ADDITION TO OTHER deals IN THE REAL ESTATE INDUSTRY. INFRASTRUCTURE AND COMMUNICATIONS SECTORS SHOWED STRONG MOVEMENT IN COLOMBIA, WHILE IN PERU, REAL ESTATE AND ENERGY INDUSTRIES STOOD OUT
In Chile, an important completed transaction during January was the merger between Derco and Inchcape, a deal that was publicly announced last year and was finally approved by regulators last month. Derco is a Chilean automotive distributor associated with the del Río family, with total revenues of US$ 2.65 billion during 2021. They distribute Suzuki, Mazda, Renault, Changa and JAC, among other automotive brands. The merger (US$ 1.56 billion) will result in Derco shareholders becoming a 9.3% stake owner of the British company. Inchcape is a global automotive distributor and retailer based in the United Kingdom, with presence in over 40 countries. In 2021, the company registered nearly US$ 10.26 billion in revenues. Inchcape has presence in Argentina, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Panama, Peru, and Uruguay and expects to enter Bolivia’s market in the future. This is not Inchcape’s first transaction in Latin America since last year they acquired 70% of Ditec, the main distributor of Jaguar, Land Rover, Porsche and Volvo in Chile, for a deal value of approx. US$ 19 million. Through the merger with Derco, Inchcape expects to increase its Latam revenues and consolidate a 25% participation in Chile’s automotive market.
In the real estate industry, Greystar Real Estate Partners, a U.S.-based international real estate developer and manager, agreed to purchase a project from Inmobiliaria Exxacon, a Chilean company specialized in housing design and construction. The transaction involves US$ 43 million for the development and construction of the “Clan” building, being the first collaboration between the two parties. The real estate project considers the construction of an all-rental property consisting in one hundred seventy-eight apartments, mainly for university students and young professionals. This is the second project in which Greystar has been involved in the last quarter after acquiring a multifamily building in “La Florida” district last December.
Another relevant transaction that was announced during January was the agreement between Parque Arauco and one of BTG Pactual Investment Funds for the acquisition of a residential building in “Estación Central” district. The fund began operations in 2018 and reported a total of twelve buildings in its portfolio by December 2022. This US$ 23 million transaction represents the second investment made by Parque Arauco in multifamily projects in Chile. The project includes nearly three hundred apartments.
An important capital increase that occurred in January consisted of a US$ 30 million financing round closed by Bioelements Chile, a biotechnology company founded in 2014 and specialized in developing circular economy solutions for packaging. BTG Pactual’s Brazilian ESG impact fund (launched in 2015) was the main investor in Bioelements first capital round. Bioelements aims to develop packaging products such as bags, films, and wrapping that are eco-friendly alternatives to conventional plastic. The funds raised will enhance the company’s business units and contribute to its expansion plan throughout Latin America.
In Colombia, Macquarie Infrastructure Partners V acquired a minority stake in Grupo Argos, a Colombian business conglomerate, for an undisclosed amount. Grupo Argos is a holding company with 90 years of experience in the market and with presence in industries such as cement production, renewable energy generation, roads and airport concessions, and urban infrastructure development. Macquarie specializes in infrastructure investments, especially in transport, telecommunications, water, waste management, and renewable energy projects. The company is managed by Macquarie Asset Management, an Australian-based company that provides financial services, such as asset management, retail and corporate banking, and wealth management, among others.
Another completed transaction that took place in Colombia was the acquisition of El País, one of the country’s most emblematic newspaper that has been restructuring its business in the last years due to its difficult financial situation. The buyer was Publicaciones Semana, a Colombian media firm that owns other local magazines such as Dinero, Jet Set, Arcadiam SoHo and Semana, the latter being one of the most influential brands in Colombia. Publicaciones Semana is part of Grupo Gilinksi, a business group with many assets in the banking, hotel & entertainment sectors in the Caribbean country.
In Peru, Celepsa Renovables completed the acquisition of Termochilca, a thermoelectric generation company with an installed capacity of 300 MW, for a total amount of US$ 141 million. Currently, Celepsa has a total of 239 MW distributed between the “El Platanal” and “Marañón” hydroelectric power plants. With this acquisition, the company will be able to double its installed capacity and reduce its operational management risk by diversifying its exposure to hydrological seasonality and climate dependency. Celepsa Renovables is a company linked to UNACEM group, one of the main holding companies in Peru, which has investments mainly in cement and concrete production and in the energy generation sector. Through its companies, UNACEM is present in Peru, Ecuador, Colombia, the United States and Chile (Cementos La Unión and Cementos Bio Bío).
Another significant announced transaction in the Peruvian market was the 80% acquisition of Inmobiliaria La Mar 1292, a Peruvian company. The buyer was Arauco Holding Peru, a subsidiary of Parque Arauco, a Chilean developer and manager of multi-format commercial real estate assets in Latin America. Arauco Holding Peru agreed to sign a contract with Desarrolladora del Pacífico for the development of a multifamily real estate project. The project contemplates a thirteen-story building located in one of the most exclusive areas of Lima. The total investment is US$16 million and includes the construction of one hundred forty-one residential units. In addition, the agreement offers a purchase option for Arauco Holding Peru to acquire the remaining 20% of Inmobiliaria La Mar’s shares, which are currently owned by Desarrolladora del Pacífico.
The first month of the year began with the Andean region’s M&A markets showing increased dynamism. Despite the economic, politic and social difficulties that are affecting Chile, Colombia and Peru, the M&A markets continue to show signs of activity and movement, hints that will help to boost the region’s recovery.
Given the expected recession for the Andean Market in 2023, local and foreign investors’ behavior will be key for M&A markets during the following months.