Transactional Track Record Report Key insights
- M&A market in Latin America remains stable in the first half of 2022
- Venture Capital deals increase by 9% in the first half of the year
- Colombia, the only country with an increase in amount and number of deals in 2022
According to the most recent Transactional Track Record report – in collaboration with Datasite and AON – the Latin American transactional market has registered a total of 1,621 mergers and acquisitions, between announced and closed, for a total amount of $50,094 million in the first half of 2022. These figures represent a stable trend in the number of deals and a 40% decrease in the amount of deals, compared to the figures recorded in the first half of 2021.
Also, venture capital investment in Latin America fell by 54% between April and June of this year compared to the same months of the previous year. According to the document, $2,426 million were invested in Latin American startups during that period, compared to $5,353 million in 2021.
The report indicates that far fewer deals were also made. The report counted 203 rounds disclosed in the second quarter, 38% less than in the first quarter and 39% less than in the year-ago quarter.
Along these lines, investment in early-stage startups in Latin America is also down from last year’s highs, but much less than in late-stage. For the second quarter, investors invested $1.1 billion in early-stage deals (Series A and B). That’s down about 15% from the first quarter and 35% from the previous quarter. The Latin American financing figures exemplify the same trend lines seen in the global reports.
It appears that falling public technology valuations and a mostly closed IPO market are having a greater impact on late-stage investment. At the early stage, where exit is likely years away, investors have less reason to worry about immediate market conditions.
However, looking across 10 quarters rather than just comparing to last year, the latest results look a little better. Investment totals for last quarter are high by historical standards. They are also higher than any quarter in 2020. So, if 2021 is thought of as an abnormally easy money period, it is conceivable that the last few months reflect something of a return to normalcy.
On the other hand, according to CB Insights, globally in the second quarter of 2022 only 85 unicorns were born, 43% fewer than the same period in 2021, when 136 companies achieved that status. This reflects that global economic uncertainty put an end to the liquidity party that the startup ecosystem experienced worldwide last year.
However, not all sectors seem to be affected with the same intensity. In the midst of this scenario, the market for mergers and acquisitions of technology companies in Latin America continues to advance. Some examples are the trucking unicorn Frete, which with $55 million in cash bought some technology companies in Brazil, while the new Chilean unicorn, Betterfly, bought the fintech Flexoh to start its operations in Europe.
Likewise, Brazilian fintech Creditas bought Andbank’s Brazilian operation for $93 million and also acquired Kzas, for an undisclosed amount, to enter the real estate lending market.
And just last week, the unicorn Hotmart bought eNotas, a Brazilian company that offers solutions for the automatic issuance of electronic invoices.
According to the Transactional Track Record report, Latin American mergers and acquisitions grew in May 2022 compared to the same period last year. Brazil, Mexico, Chile, Colombia and Argentina are, respectively, the five countries with the highest volume of transactions since January.
Let’s check more insights:
Private Equity and Venture Capital
A total of 83 Private Equity transactions happened in 1H2022, of which 33 transactions have an aggregate non-confidential amount of $4,711 million. This represents a 14% decrease in the number of transactions and a 47% decrease in value compared to the same period in 2021.
As for the Venture Capital segment, 528 transactions were completed in the first half of the year, of which 425 transactions have a non-confidential amount totaling around $5,619 million, representing a 9% increase in the number of transactions and a 34% decrease in capital compared to 2021.
Ranking of transactions by country
In 2022, by number of transactions, Brazil is leading the ranking of the most active countries in the region with 1,130 deals (up 3%), and a 40% decrease in mobilized capital year-on-year ($31,294 million). It is followed by Mexico, with 191 deals (up 5%), and a 32% decrease in the amount of capital raised compared to the same period last year ($7,438 million).
Meanwhile, Chile climbed one place in the ranking, with 137 transactions (down 21%), and a 23% drop in capital raised ($6.853 million). Colombia, on the other hand, drops in the ranking but is the only country in the region to record an increase in the amount and number of transactions. It recorded a total of 129 operations (an increase of 16%), with a 53% increase in mobilized capital ($6.219 million).
In the meantime, the 96 operations in Argentina represented an increase of 5% and a decrease of 83% in amount compared to the same period last year ($1,367 million). Peru, for its part, recorded 62 transactions (up 3%) and a 32% decrease in raised capital compared to the same period last year ($1,686 million).
In the Cross-Border area, the investment hunger of Latin American companies abroad in the first half of 2022 stands out, especially in Europe and North America, where 42 transactions have been carried out in each region. The companies that have carried out the most strategic transactions in Latin America are from North America, with 308 operations, Europe (207), and Asia (46).
You can check the full report in TRR.