Chile 2013 Blog: Chile Grasps Opportune Moment as Multilatinas See Growth Surge
Latin American multinationals experienced $32 billion-worth of intra-Latin mergers and acquisitions last year.
The last five years of global financial turmoil were good for Latin American multilatinas. Many multinationals based in developed economies retreated from acquiring emerging-market assets, playing it safe in familiar harbors. Quite a few Latin American countries had already suffered their own economic busts and were well-positioned to weather the crisis when it took off in 2008. This relative stability allowed local companies savvy to home markets to come in and set up shop, as it were, across the region.
Historically, the biggest players in the region were Argentine, Brazilian, and Mexican companies. Recently, however, Chilean and Colombian multilatinas have flexed their muscles, acquiring assets across the region.
HSBC’s May 2013 LatAm Equity Insights report defines a multilatina as a company with 20 or more percent of assets outside its home country, and finds that 2012 saw a whopping $32 billion-worth of intra-Latin mergers and acquisitions. Though that number is impressive, perhaps most astounding is the 3,050 percent increase the region saw in foreign direct investment over the 18 years leading up to 2010—70 percent of which stayed in the region. Moreover, the study gives Chile the gold star for standout performance.
The report, however, criticises Latin American firms for their underrepresentation outside of the region, with not one making it to the global top 100.
Colombia’s Semana magazine features a report that tells the story behind recent regional mergers and acquisitions of non-Latin assets by local firms, with a focus on the financial and retail sectors. The overwhelming theme that emerges in this tale is that Chileans and Colombians in particular have been quick to see an opportunity when it comes their way. This includes extensive intraregional purchases of non-Latin-owned assets up for sale.
Chile, in particular, went on a shopping spree last year, with external investments up 47 percent over 12 months. The preferred destination was Pacific Alliance peer Colombia, which received $5.3 billion in investments from the Southern Cone country.
AméricaEconomía published a ranking of the 80 biggest multilatinas in May 2013, giving Mexican cement behemoth CEMEX first place, followed by Brazilian food maker Grupo JBS.