We have recently mentioned how the investment banking business in Brazil has been flying: be it in the banks’ revenue figures or its executives’ salaries
But according to Valor Economico, Brazil has lost some space in IPOs and M&A; activity to its neighboring countries in 2011.

IPOs in LatAm (excluding Brazil) reached US$20.2 billion, four times the rate of 2010. In Brazil, on the other hand, the volume fell 77.3% to US$11.1 billion.
The largest share offering in Latin America last year was Gerdau’s US$2.5 billion, but Colombia’s
Suramericana de Inversiones appears somewhat close in the second spot, in a US$1.7 billion transaction.

Mergers and Acquisitions

While the financial volume of M&A; activity with Brazilian companies fell 45.2%, in the rest of Latin America the fall was a softer 31.7%.

This is the only financial sector that Brazil has pulled off better than any place in LatAm. The volume issued in Brazil was 7.6%, while its neighbors registered an increase of 1.54%.

Banks are expanding to other countries

No wonder that the Brazilian banks themselves are seeking to move beyond national borders. BTG Pactual, for example, should close later this month the purchase of Chilean brokerage firm Celfin. Itaú BBA already opened a wholesale bank in Colombia and acquired agencies in Chile. Foreign private equity funds, such as Advent, which were based only in Brazil, are now opening offices in other LatAm countries.
Next stars: Peru, Colombia, Chile
“The LatAm region has become an important pocket of distribution for Brazilian assets, especially Peru, Colombia and Chile,” says Guilherme Paes, a partner at BTG Pactual. These are countries that until recently were not part of an investment banking strategy, but things have changed.

These three countries cited above are growing economies, and at the same time not as internationally linked as Brazil, which makes them less susceptible to the world’s financial crisis. Brazil is an exporter, hence it depends more on what happens to China and the United States. Besides, Brazil’s stock market performance in 2011 have also not helped improve investors moods recently.
Share →