Second quarter breaks record of mergers and acquisitions

Second quarter breaks record of mergers and acquisitions The Brazilian market may present a record number of mergers and acquisitions this year, if it maintains the pace of transactions presented in the first half of the year. In the second quarter, and in the last 12 months, until June, there was a record number of businesses, according to a KPMG survey.

The electoral race, with the political landscape still foggy, may bring some slowdown to the pace of the transactions. Sources in this market say, as Valor reports today, that the business environment has cooled, but they also note that if the presidential race gains a clearer edge, it again and again continues to heat up this year. A study by KPMG shows that 461 operations were closed in the first six months of the year, compared to 385 in the first half of 2017, representing an increase of 19.7%.

Growth was driven mainly by internet and technology companies. “The second quarter had the highest number of transactions since 1994, when the survey began, and in the 12 months up to June, there were also 906 transactions, and 2018 will probably have a record number of transactions,” said Luis Motta, analyst and coordinator the research and partner of KPMG. Last year, 830 transactions were closed in the country, with growth of 12.2% compared to 2016. Motta, as well as other experts in the financial sector, believes that there may be a reduction in the pace of closing transactions, due to the period electoral.

“There may be some retention in mergers and acquisitions, but the political landscape is not so unpredictable. The situation is not as difficult as in 2015, when there was impeachment,” Motta said. The executive added that in this year the country presents economic growth, albeit small, inflation and low interest and currency depreciated against the dollar. These factors make Brazilian assets more attractive in price and future growth potential.

Motta noted that there was a strong advance in the number of transactions with internet and information technology companies. In the first half of the year, according to the KPMG survey, 73 deals with internet companies were closed, compared to 48 in the same period of 2017, up 52.1%. Mergers and acquisitions with technology companies totaled 55 operations in the first half, compared to 47 last year, up 17.0%. ”

Demand is growing mainly by companies that have developed innovative businesses, either with online services or applications,” said Motta. Among the transactions closed in the first half are the purchase of Brazilian startup Decora, specializing in the creation of 3D decoration scenarios, by the American CreativeDrive, for US $ 100 million. Linx bought DCG Soluções, owner of the e-commerce system EZ Commerce, for R $ 67 million. Linx also acquired Único Sistemas e Consultoria for R $ 16 million and Itecgyn of software for pharmacies for R $ 16.4 million. US investment manager FTV Capital acquired a stake in Brazilian fintech EBanx, which specializes in payment processes, for US $ 30 million.

VentureCity, the International Finance Corporation (IFC) and Ventech acquired a stake in the RecargaPay platform for $ 22 million. Investment managers Propel Ventures, Monashees, Quona Capital, Omidyar Network, Tera and Yellow Ventures acquired a stake in Banco Neon digital bank for US $ 22 million. Motta noted that Internet and technology transactions involved not only investment groups, but also retailers and internet companies. “The expectation is that this movement will remain strong in the coming months, due to the high demand for these types of companies,” he said.

KPMG does not have a balance sheet of the total value involved in mergers and acquisitions, because a large part of the transactions are kept confidential by companies. Motta noted, however, that in Brazil, operations with internet and technology companies generally have lower values ​​than transactions in more traditional sectors, such as steel, oil and gas, pulp and paper.

According to KPMG’s survey, in the first half of the year, there was an increase in the demand for mergers and acquisitions of Brazilian companies and also of foreign groups. Operations by Brazilian companies totaled 267 operations, compared to 169 in the first half of 2017, an increase of 58%. Operations by foreign companies totaled 194 transactions, up from 175 a year earlier, up 10.9%.

Source: Value