Over the last three years, the economy of Latin America lost steam. Nevertheless, some multilatinas comfortably overcame the downtrend. The most successful among the TOP 500 shared their strategies for 2016 with Latin Trade.
For many of the regions businesses, 2015 turned out to be a year to forget, and there are no guarantees that 2016 will be any easier. However, there will also be opportunities, and the multilatinas' market diversification puts them in a good position to take advantage of these bright spots. Adversity also brings an impetus to adjust and grow.
"In difficult times, corporations tend to look inward for cost reductions, and get lean. For others, it will be a good moment to acquire assets and/or strengthen their internationalization," said Lisandro Miguens, head of debt capital markets for Latin America at J.P. Morgan, in an interview with Latin Trade.
As Miguens points out, the availability of undervalued assets is growing, thus increasing the possibilities for mergers and acquisitions (M&A). This development is capturing the attention of savvy multilatinas, including for example, the Mexican conglomerate Grupo Alfa. The group recently acquired interests in the Mexican telecommunications sector as the latter opened to competition. "Alfa is continuously analyzing opportunities to add value for shareholders, either through M&As or even divestments. We will keep focused on our core businesses more than entering into radically different ones," said a source at the group.
Interestingly, some attractive assets are on offer in Brazil, which although currently beleaguered by economic and political woes, continues to offer a favorable long-term perspective. "Grupo Arcor is always looking for new opportunities to grow and develop, both locally and abroad. The regions economic conditions could give way to interesting M&A deals and we are following the Brazilian market with particular interest to this end," a representative of the Argentina-based confectionary told Latin Trade.
In another example of continued interest towards Brazil, Grupo Orbis--the Colombian multilatina producing paints, chemicals and water handling products, and active in retail--purchased two new chemical firms in the State of Espiritu Santo at the end of last year, which the firm expects will help to strengthen its presence in the Brazilian chemicals market--one of the largest in the Americas.
At the same time, the company has been disvesting non-strategic assets, like their ink production in Chile, as part of Orbis's plan to double revenues by 2021.
Others, like Colombian Grupo Sura, through its subsidiary Sura Asset Management, the largest pension fund manager in the region, wants to double savings under management to $200 billion over the next five years, deepening its presence In the new Latin star, Mexico.
A SLOWER PACE
Other multilatinas will focus next year on consolidating recent transformational M&As, as in the case of Colombian Grupo EPM, which earlier in 2015 purchased the water and sanitation firm ANSA in Chile for $965 million. "This was our largest deal in history and one that contributes to our diversification by expanding our presence in the water treatment segment," said Jorge Andres Tabares, EPM's executive vice president for corporate finance and investment management. He added that the firm will not discard smaller acquisitions in the near future, but in the meantime it will keep implementing a $5-billion investment plan for 2015-18, mostly earmarked for expanding hydropower generation.
Alonso Sanchez Rosario, vice president and senior analyst at Moody's, told Latin Trade from Mexico that multilatinas that have been active in M&As in...