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Alternative Market Briefing

Sluggish economy hurting M&A activity in Latin America, while asset managers, hedge funds see opportunity

Thursday, October 11, 2012

Bailey McCann, Opalesque New York:

New data from the Organization for Economic Cooperation and Development (OECD) shows a dramatic decline in the amount of international dollars flowing into Latin America for mergers and acquisitions. According to the report, international M&A activity in the region is expected to drop 30% or $36bn in 2012. Worldwide, the deal flow of international M&A is expected to decline even more - 36% in 2012.

The slowdown in Latin America was echoed by the International Monetary Fund (IMF) which recently released its Global Economic Outlook, and downgraded its view of the region. The IMF cut its GDP forecast for Brazil alone in half to 1.5%, with an uptick not on the horizon until 2013. That said, overall, the region is expected to post expansion in gross domestic product this year of 3.2%, bolstered largely by countries often left out of the Latin America story including Mexico and Chile.

The OECD report notes that the United States and Spain have been Latin America’s main sources of IM&A, accounting for 20% and 13% respectively, but economic uncertainty in the US and a debt crisis in Spain have dampened activity. In more recent years, Asian countries have filled this gap,......................

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