Latin American companies in 2024 remained reluctant to engage equity investors for their funding needs. Even so, the winner of the Equity House of the Year was involved in the most important deals coming out of the region in what was otherwise a difficult market.
BofA Securities led the ECM rankings in the region with almost $1.9 billion in deal value year-on-year through the third quarter, moving up from third place in 2023, according to Dealogic. In terms of revenue, the bank came second with 17% of the total, a slightly higher share than last year.
“2024 was another tough year for the equity markets, generally speaking” says Augusto Urmeneta, president for Latin America and head of Latin America investment banking at BofA Securities in New York.
He stresses that only two IPOs were registered in the region in the past 12 months, by Mexican retailer BBB Foods and regional healthcare firm Auna, which is present in Mexico, Peru and Colombia. What really moved the market were follow-on deals, such as the $2.7 billion offer via which São Paulo-based water and sanitation group Sabesp concluded its privatization process. Block trades pushed by funds that aimed to cash out their investments also moved the needle, Urmeneta points out.
BofA played a key role in both BBB Foods and Sabesp transactions, themselves both award-winning deals.
In general, however, volumes were lower than in 2023, and Brazil, where interest rates have been on the rise, significantly underperformed expectations. Urmeneta estimates that the Brazilian market usually answers for something like 85% of equity market equity activity in the region, but barely reached 60% in 2024.
“The current very high-interest rate environment in Brazil does not allow for equity capital formation and makes deal activity more difficult,” Urmeneta says. “But interest rates should start coming down towards the end of 2025, which would position the market for a more productive 2026.”
The other main equity market in the region, Mexico, saw reduced activity due to the uncertainties created by the electoral cycles at home and in the US, he remarks. However, although there is concern about the extent to which the forthcoming Trump administration may impact the nearshoring trend in Mexico, Urmeneta believes the country’s economy will be able to sail the turbulent waters, and equity markets may be more active as a result.
“In the long run, Mexico should benefit from US growth, resulting in increased equity market activity,” he says.