M&A deal volumes in Latin America totaled $38.6bn in the first half of 2016, up from $29.3bn in the same period last year, according to Dealogic.
Companies outside the region spent $18.4bn on M&A deals in Latin America in the first half of the year, up from $15.8bn during the same time in 2015.
Chilean companies were the top acquisition targets, with $14bn in deals done in the first half of the year. It was the first time Chile has topped the charts of acquired companies, Dealogic said.
Investors with a greater appetite for risk opted for Brazilian acquisitions. The country ranked second with $10.6bn in M&A deals in the first half of the year, lower than the $12.8bn in the first half of 2015.
Regional M&A revenues came to $179m in the first half of 2016, down from $195m in the same period last year. The M&A revenues in the first half of this year were the lowest since 2006, Dealogic said.
Power and utilities proved to be popular sectors for investment. Canadian investor Brookfield’s $3bn acquisition of Colombia’s Isagen was the largest cross-border deal in the first half.
Italian power company Enel bid $2.6bn for a 40% stake in Chilean power firm Endesa Americas and US-based Fintech Advisory said in June that it bid about $1bn to buy Telecom Argentina from majority shareholder Telecom Italia. These were the second and third-largest deals in the first six months of 2016, Dealogic said.
Deal flow is expected to spike in the second half of the year, an M&A banker told LatinFinance. Brazil’s Petrobras is due to announce more asset sales this year after it sold in May a 67% stake in Petrobras Argentina to local rival Pampa Energia.
However, as deal volume has risen, asset valuations have decreased, the banker said. That trend was evident at the Colombian government’s auction of Isagen. Brookfield was the sole bidder on auction day, netting the government stake for the minimum price.