High commodity prices, comparative calm keeping investors interested in Latam M&A

Latin American bankers expect investors to overlook political worries in the region this year and keep investing in local companies, buoyed by strong commodities prices and a comfortable distance from geopolitical risks in eastern Europe. The volume of mergers and acquisitions in the region fell 30% in the first quarter from a year ago, while share offerings fell 69%, with rising interest rates and volatile markets hurting on both fronts, bankers and lawyers said. "Volatile markets impacted valuations and delayed deals," said Felipe Bittencourt, head of advisory at Vinci Partners. He said he expects lower M&A and equity issues volume in the region this year, as higher interest rates raise the required rates of return for capital invested in companies. However, several deal advisors said the opportunity for returns far from the war roiling Ukraine and its neighbors had kept investors engaged in Latin American markets. Bankers see a growing flow of deals among healthcare, energy and tech companies, including fintechs. "Despite recent problems in Europe and our upcoming elections, corporate and investor sentiment remain positive. We should have more deals," said Brazil-based Luiz Muniz, partner and head of Latin America at Rothschild & Co. He pointed out a healthcare deal is again topping the regional tables: hospital chain SA Rede D'Or Sao Luiz SA agreed in February to acquire insurer Sul America for 13b reais ($2.81b).<br/>