Credit Suisse sees stable Brazil dealmaking activity this year
Jan 17, 2015 10:43 AM EST
Jan 17, 2015 10:43 AM EST
Mergers and acquisitions activity in Brazil this year is likely to have a performance similar to last year's even if sluggish growth further weighs down confidence in Latin America's largest economy, a senior Credit Suisse Group AG dealmaker in the country said.
A weaker currency and lower asset prices will keep luring foreign companies and investment funds into Brazil this year, Fábio Mourão, Credit Suisse's head of Brazil investment-banking, said on Thursday. The Swiss bank topped Thomson Reuters' Brazil M&A rankings in terms of value last year, after advising on 25 deals worth $35.05 billion.
A stagnant economy and a 12.5 percent tumble in the currency last year drove down valuations and narrowed the gap between asking prices and bids. That helped spur some robust dealmaking activity on complex deals like spinoffs, de-listings and debt restructurings, a trend that Mourão expects again this year.
For initial public offerings, banks may struggle to "find a window of opportunity that stays itself open enough to finalize deals," Mourão said. Last year, only one company went public in Brazil, the worst equity capital markets performance for the country in at least 11 years, Thomson Reuters data showed.
Local and foreign companies could boost their exposure to Brazil this year through purchases to meet a specific strategic need, Mourão noted, without elaborating. Private equity firms, which are flush with cash as they fetch record money for their Latin American investments, will remain on the prowl to take advantage of declining valuations, he added.
Mourão declined to discuss Credit Suisse's M&A and capital markets deal flow for this year. He noted that advisory fees will repeat their performance of last year "for the industry as a whole," adding that banker compensation "should be good for Credit Suisse."
His remarks on fees echo those from rival bankers, who are skeptical that a recovery is underway. Brazil's share of the region's total fee pool - which includes M&A as well as stock and bond sales - slipped to a record-low 34 percent last year, according to data by capital markets data firm Dealogic.
Last year, companies announced $77.07 billion worth of corporate takeovers in Brazil, the largest amount since 2011, a Thomson Reuters report on M&A activity showed on Jan. 2. Some 553 deals were announced last year, down from 633 in 2013.
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