LOW LEVEL OF ACTIVITY IN M&A TRANSACTIONS DURING FEBRUARY IN THE ANDEAN REGION
DURING FEBRUARY, A VARIETY OF INDUSTRIES PARTICIPATED IN M&A TRANSACTIONS AND CAPITAL RAISING. THESE TRANSACTIONS WERE MOSTLY HELD IN THE ENERGY, MINING, FINANCIAL, CHEMICAL AND TRANSPORTATION SECTORS. DESPITE THE LOW VOLUME OF TRANSACTIONS, THE TECHNOLOGY SECTOR STOOD OUT AMONG THEM
In Chile, the energy industry materialized a transaction with the sale of three solar power generation projects, with a total installed capacity of 32.5 MW, by Grenergy Renovables. Grenergy is a publicly traded Spanish energy producer and specialist in the development, construction, and management of solar, wind and storage projects. They are present in more than 10 countries, with an installed capacity of over 1.7 GW. Although the buyer has not been disclosed, it was announced that the deal value was close to US$ 44.2 million. This transaction is aligned with Grenergy’s asset rotation policy, which seeks to sell assets, already in operation, to generate value and finance new projects in the region. In addition, it will also enable the company to reduce its debt levels, improve its performance and break into potential new markets.
In the health sector, UC Christus announced its plan to acquire Medicien’s medical centers from Colmena, a Chilean health insurance company. UC Christus has the largest network of private medical centers in Chile and among its assets are two clinics, a hospital, several laboratories and more than 10 medical clinics. The acquisition is part of UC Christus’ expansion strategy throughout the country to continue offering a wide range of services to its clients. On Colmena’s side, the transaction is key to address the financial crisis that is currently affecting the private medical insurance industry (Isapres).
Another relevant transaction in February was the sale of 27% of Tanner Servicios Financieros to Grupo Massú and Jorge Sabag, by the U.S. fund Capital Group. In October 2013, Capital Group made a US$ 200 million capital investment in the firm and is now selling its stake after 10 years. This transaction corresponds to an increase in the shareholding of Grupo Massú and Sabag since both already owned shares in the company. Grupo Massú is the business conglomerate linked to Ricardo Massú, investor and controller of Tanner, while Jorge Sabag is a historical investor of the company. With this, the Massú Group and Sabag will reach a stake of 82% and 9%, respectively.
Regarding capital raising transactions in February, Buk, a company that offers software services (SAAS) for human resources management, closed a financing round of US$ 35 million. The main sponsor was Base10, a U.S. investment fund, which is mostly known for financing companies with disruptive and innovative approaches. Other investors involved in this capital increase were Greenoaks Capital Partners, a leading technology and internet investment company, and SoftBank Latin America, a leading Latin American venture capital firm. The funds raised will strengthen Buk’s business units in Chile, Colombia, Peru, Mexico, and Brazil, aiming to consolidate its leadership in the industry. This was the second financing round achieved by the company, as they already completed a Series A for US$ 50 million in October 2021. These two financing rounds are among the largest ones that were executed in Chile’s technology sector, demonstrating the robust and successful strategy achieved by the company in recent years.
Another capital raising transaction was carried out by Lemu, totaling US$ 8 million that was fully provided by Arauco Ventures. Lemu is a Chilean digital platform that brings together communities with the aim to act in favor of nature and the planet. More specifically, Lemu offers a verifiable conservation platform that connects investors with environmental projects, enabling them to measure the impact of their investments in nature conservation. Arauco Ventures, is a division of Arauco, a leading Chilean forestry company that was created with the purpose of promoting entrepreneurship and innovation to generate sustainable solutions, both socially and environmentally. The financing round is expected to promote Lemu’s mission to reduce climate change effects and cope with environmental crisis using technology.
During February in Colombia, the Peruvian company, Talma, became the sole owner of Servicios Aeroportuarios Integrados (SAI). Talma purchased 90% of SAI’s shares from Avianca airlines and 10% from its own holding company, Sandoval Group. The transaction is part of Talma’s international expansion plan which began in 2010 with its entry into the Mexican market. The company’s main objective is to limit risk exposure of depending on a single geographic location. SAI, on the other hand, is one of the most important companies specialized in airline land services such as attention at passenger modules and baggage handling. It is present in more than 13 cities in Colombia, including Bogota, a key location in terms of passenger flow. Avianca’s decision is part of the company’s restructuring plan, after declaring bankruptcy at the beginning of the Covid-19 pandemic. This plan seeks to improve Avianca’s competitiveness by streamlining its operations, optimizing its resources utilization, and reducing costs. After the transaction, Talma will become Avianca’s partner to continue providing assistance in ground operations.
Three transactions took place in Peru during February. At the beginning of the month, Solenis, the multinational provider of water treatment solutions and specialty chemicals, acquired 100% of Grand Invest Group. The latter comprises the assets of the Peruvian leader in the production of chemicals for food, energy and mining solutions, with more than 10 years in the industry. This deal is part of Solenis’ strategy to provide solutions to consumers in the region and consolidate its presence in Latin America. Following the purchase, the company will benefit from new warehousing facilities and a better perspective of the Peruvian market. This would be Solenis’ fifth acquisition since it was transferred to Platinum Equity in 2021.
Consistent with the increased interest in the technology industry, Inretail purchased 100% of Jokr Perú, a supermarket delivery app. Inretail is a leading Peruvian retail group, with operations in food, malls, and pharmaceutical markets, among others. This transaction is part of Inretail’s strategy to consolidate its digital ecosystem and expand its mass consumption brands portfolio which include Plaza Vea, Vivanda and Makro. Jokr, on the other hand, is known for its 15-minute home deliveries and for reaching a US$ 1.2 billion valuation, only eight months after its foundation. The acquisition of its Peruvian operations comes along with a parallel plan in which Jokr decided to exit from Colombia and Chile to focus on markets with higher Jokr penetration such as Peru, Mexico, and Brazil.
M&A operations in Peru finally closed with an important transaction in the mining sector. The Canadian company, Regulus Resources, acquired 70% of the mining rights of the Colquirrumi copper project, owned by Compañía Minera Colquirrumi, a subsidiary of the Peruvian Buenaventura group. Buenaventura is a leading Peruvian gold, silver, and copper producer with more than 60 years in the mining market. Following the acquisition, Regulus and Colquirrumi will create a joint venture, where Regulus will act as the sole operator of the copper project. With this new acquisition, Regulus adds strategic value to its operations in Peru by incorporating a new area with high levels of mineralization as well as presence in a strategic location for the construction of an open pit.
In conclusion, during the month of February, various sectors were involved in M&A transactions and capital raising in Latin America, yet with low volumes overall. Despite the region’s current challenges, such as political instability and economic uncertainty, M&A transactions are still seen as a viable inorganic growth strategy. Recent transactions suggest investors interest in the region to reduce risk, supported both by the maturity of the regional market and the opportunities offered by the different sectors of the economy.
For the year ahead, it will also be crucial to observe how local and international markets behave, given the recent global events such as the war in Ukraine, the logistics crisis, Covid-19 pandemic, high inflation rates, and the suppressed economic growth forecasts.