DURING MARCH, THE RETAIL, TELECOMMUNICATIONS AND MINING INDUSTRIES LED M&A TRANSACTION VALUES IN THE ANDEAN REGION
THE M&A MARKETS IN THE ANDEAN REGION SHOWED A CONTINUITY IN ACTIVITY, WITH IMPORTANT TRANSACTIONS TAKING PLACE IN THE RETAIL, INFRASTRUCTURE, MINING, TECHNOLOGY AND ENERGY INDUSTRIES. INTERNATIONAL FINANCIAL & STRATEGIC CROSS BORDER INVESTORS DISPLAYED GREAT INTEREST IN THE REGION, AND LED THE OVERALL ACTIVITY
Among the transactions completed in Chile during March, the sale of all Komax’s shares to Grupo Axo stands out. Komax is a clothing retailer and exclusive licensor of globally recognized brands such as The North Face, GAP and Banana Republic, operating close to 150 stores in Chile, Peru and Uruguay. The acquirer, Grupo Axo, is a leading Mexican retail holding company that represents and distributes more than 30 brands in Mexico and Chile across the apparel, personal care and home products segments. Prior to this acquisition, Komax’s controlling shareholder was Linzor Capital Partners, a Chilean based private equity firm focused on investing throughout Latin America, which owns companies in the digital transformation, retail, healthcare and finance sectors, among others. During the term in which Linzor controlled the company, it boosted Komax’s inorganic growth through three acquisitions. It expanded the company’s presence in Uruguay and improved the profitability of the business in Peru. This acquisition is part of Grupo Axo’s growth strategy in the region, which includes not only acquisitions of consolidated companies, but also organic growth with the opening of new stores.
In the infrastructure sector, Macquarie announced plans to acquire 49% of Chilean GTD’s data center business to help fund a US$ 600 million investment plan proposed by GTD. Macquarie is an Australian global financial services group with presence in 33 countries. It is one of the largest Australian companies and one of the largest infrastructure asset managers in the world. GTD is a Chilean telecommunications and information technology company that offers high-speed connectivity services, IT solutions and cloud services. The company has a broad presence in Latin America and Spain and is recognized as one of the leading companies in the telecommunications sector in Chile. The M&A process began in February 2022, when GTD’s Board of Directors agreed to search for a new partner. GTD has received and accepted a non-binding offer from the Australian group.
Also announced during March was the acquisition of 51% of SCM Minera Lumina Copper Chile (“Lumina Chile”) by Lundin Mining for a total value of US$950 million. Lumina Chile is a Chilean company that operates the “Caserones” copper and molybdenum mine, located in the Copiapó Valley in the Atacama Region. The selling shareholders are JX Nippon Mining & Metals along with its subsidiaries (“JX Mining”). This Japanese company is engaged in the research, development, production and sale of advanced materials and high technology products. Its product portfolio includes battery materials and copper alloy products. Lundin Mining, the buyer, is a Canadian mining company engaged in the exploration, development and production of base metals such as copper, nickel, zinc and other precious metals worldwide. The company, which trades on the Toronto and Stockholm stock exchanges, operates several mines in Canada, Portugal, Chile, Brazil and the United States. As consideration of this transaction, JX Mining will receive US$ 800 million in cash, along with US$ 150 million deferred installments over a six-year period. With this transaction, Lundin Mining adds to its portfolio another long-life copper and molybdenum mine with significant growth potential in the Atacama Region, an area where they are already present through Minera Candelaria.
During the last days of March, the US $644 million acquisition of Soprole by Gloria Foods was completed. Soprole is a Chilean company engaged in the production and commercialization of food and beverages, specialized in dairy products and derivatives. The company has a broad presence in the Chilean market, being one of the leading companies in the sector. Grupo Gloria is a Peruvian company engaged in the production and marketing of food, with presence in several countries worldwide but specially in Latin America. The company has numerous divisions and brands, offering a wide variety of products, including dairy alternatives, canned foods, beverages, pasta, snacks and other mass-consumer products. This transaction was initiated in September 2021, when Soprole’s former controller, Fonterra, analyzed a potential divestiture. By closing this transaction, Gloria Foods expects to strengthen its presence in the region and continue to position itself as an industry leader, in addition to enhancing Soprole’s strategy and deepening its leadership in the Chilean market.
In Colombia, the U.S. private equity fund Accel-KKR completed the acquisition of Facture, an invoicing and tax compliance software company. The transaction included the purchase of two other Mexican invoicing companies, Pegaso and Indicium, in order to merge the three assets into a single international digital platform. Facture provides software services to Colombian companies. Its functions include online payment facilities, collections, electronic payroll and receipt of documents through a centralized information system. Currently, the software serves more than 14,000 users in the public, logistics, retail, and health sectors, among others. Accel-KKR, on the other hand, is a U.S. investment fund incorporated in 2000 through a joint venture between the venture capital firm, Accel, and the private equity firm, KKR. Their investment strategy focuses on innovative business software with high growth potential and a diverse customer base.
Also in Colombia, Constructora Conconcreto announced that it will sell 35% of its participation in Vía 40 Express, a consortium in charge of the construction of the Bogotá-Griradot third lane, one of the busiest roads in the capital city. Conconcreto is a Colombian family-owned company with more than 60 years of experience developing infrastructure projects in airports and sectors such as logistics, electricity, commercial and real estate. Conconcreto’s decision to sell this stake is part of its strategy to meet its financial obligations, as well as strengthening the company’s liquidity and limit construction risks exposure. At the closing of the transaction, Conconcreto will transfer 35% stake in the consortium to Vinci Highways, keeping only 15% of the shares. Vinci Highways will now be tasked with completing the construction of the project. Headquartered in France, Vinci Highways is involved in concessions, it offers transportation services in 16 countries and has built nearly 4,000 km of highways.
A relevant transaction that took place in Peru was the purchase by Global Infrastructure Partners of a 50% stake in Tramarsa, a maritime port infrastructure platform owned by the Peruvian holding company Alicorp, one of the largest industrial conglomerates in Latin America. With more than 30 years of operations, Tramarsa operates two seaports located in strategic regions in the country, which have high mining and agricultural activity. Global Infrastructure Partners is a leading worldwide infrastructure investment fund with US$ 87 billion assets under management (AuM) . Upon completion of this transaction, the port company will be a joint venture between the investment fund and Alicorp. Both companies plan to increase investments in Tramarsa and expand their operation base to other parts of the Andean region. This investment in the port operator took place in a context of better prospects for the Peruvian copper market, which is expected to double by 2035.
Also in Peru, one of the most relevant electricity transmission and distribution companies in the country, Luz del Sur, announced that it will acquire 100% of Sojitz Arcus Investment shares for ~US$ 133 million. Sojitz – is the Peruvian subsidiary of the multinational firm, Sojitz Corporation, a Japanese company with more than 100 years in the sector. Among Sojitz’s assets in Peru are two solar generation plants Majes Arcus and Repartición Arcus (each with an installed capacity of 22.1 MW), both located in the city of Arequipa, in the south of the country. Sojitz acquired the assets from the Spanish group T-Solar Global between 2015 and 2020. The solar plants are operating and have 20-year PPAs guaranteed by the Peruvian Ministry of Energy and Mines. With the transaction, Luz del Sur will now participate in the renewables sector and strengthen its presence in the energy industry by competing in the generation, transmission and distribution segments.
Regarding transnational transactions in the Andean region, Fluor Corporation sold its interest in AMECO Chile and AMECO Perú to Grupo STRACON. AMECO is a company with more than 29 years of experience servicing and providing mobile equipment rental solutions to the mining industry. AMECO’s activities are mostly focused in Chile, where it serves the country’s main copper producers such as Antofagasta Minerals, BHP, Capstone Copper and Codelco, among others. STRACON, the acquirer, is a group that operates in the mining services industry and has more than 30 years of experience, with presence in Canada, the United States, Mexico, Colombia, Ecuador, Peru and Chile. STRACON is currently a portfolio company of Ashmore Group, a global investment fund that has carried out various acquisitions in the industrial, consumer, technology, energy and real estate sectors in Latin America. Following this acquisition, STRACON expects to increase its revenues by 25% by achieving economies of scale in its operations, as well as incorporating an important network of contacts and new business lines. This transaction is aligned with Fluor Corporation’s strategy to divest from AMECO’s business lines in order to redirect its efforts to its core activities.
Also in the region, one of the most relevant private equity firms in the UK, Actis, announced the estimated US$ 500 million purchase of 11 data centers located in 6 Latin American countries, including Chile and Peru. The data centers are controlled by Nabiax, a European data center operator jointly-owned by the Spanish investment fund, Asterion Industrial Partners and Telefónica. According to Actis, the transaction would be consistent with the sector’s optimistic forecasts, which foresee regional growth of 250% during the next 5 years.
During March, various M&A transactions in the Andean Market took place, with relevant presence of the retail, infrastructure, mining and energy industries. A greater involvement from international financial companies and private equity firms were registered this month, as higher growth opportunities are expected in certain industries. 60 transactions have occurred in the first quarter of 2023, compared to 90 transactions for the same period last year. However, more investment decisions could be expected as political uncertainty wanes, and high inflation, interest rates and cost of capital decrease.