Mexico, Andes to Drive M&A in 2014

After a slower than expected year M&A bankers are preparing for more active 2014, with Mexicans and Andeans compensating for a troubled Brazilian situation. Funds raised in a booming DCM during the last few years, and in an increasingly active ECM this year, may now be put to use for expansion. “Following heavy equity and debt issuance, we expect the M&A market in Mexico to be substantial next year,” Daniel Cavalli, head of LatAm M&A at Credit Suisse, tells LatinFinance. He explains that in 2013 slowing in Brazil was balanced somewhat by an improvement in Mexico and in the rest of LatAm – compensating nicely in terms of volume, if not in fees. Cavalli expects the financial and natural resources sectors to be among the most important in 2014. A return to US growth and the end of cheap financing should not have a profound effect on LatAm M&A, as it didn’t when growth slowed in the US. “We continue to be focused and invested in Brazil as we see good prospects in the medium term. Mexico will be stronger as a consequence of the reforms being passed this year, also better spending from the government will translate into better prospects in 2014. This will trigger more M&A both cross-border and local-to-local. We are sure to see more Mexicans entering Europe and North America,” Lisandro Miguens, co-head of corporate and investment banking for Latin America at JPMorgan, tells LatinFinance. Miguens sees global M&A volumes increasing next year, driving LatAm to more activity than in 2013, though not necessarily as much as 2011 or 2012. Announced M&A activity reached $139.39bn through Monday from 1,437 deals, according to Dealogic data. This is down from $163.51bn from 1,795 deals in the corresponding period in 2012. Credit Suisse led the LatAm league tables with $30.39bn volume, followed closely by BTG Pactual ($30.02bn) and Bank of America Merrill Lynch ($27.69bn).