Bovespa-BM&F Plot Regional Consolidation

The Bovepa and the BM&F, which yesterday announced a merger of equals, seek to become an even bigger LatAm exchange by alliance or acquisition. A new holding company, provisionally called Bolsa Nova, will house the Bovespa and BM&F brands and is expected to have a market cap close to $20bn, making it the second largest exchange in the Americas. Bolsa Nova’s subsidiaries will cover the full range of tradable assets available in LatAm including currencies, commodities, derivatives, fixed income, equity and equity derivatives. The merged exchange seeks to establish a new role as a trade forum serving more than just Brazil. “The idea is to create regional consolidator,” says Marco Goncalves, head of M&A for Brazil at Credit Suisse, which advised Bovespa on the union. The new entity will look to set up specific agreements or make outright acquisitions of other exchanges in the region. One of the most obvious candidates is Mexico’s Bolsa, with which the Bovespa was previously in talks to set up a trading agreement for local investors to buy and settle offshore. The BM&F has also expressed an interest in a linkup with Argentina’s Bolsa de Comercio de Rosario, which trades commodities. Rothschild advised the BM&F on the transaction.