How investments keep pouring into Brazil’s ICT sector despite local and global woes – BNamericas English

How investments keep pouring into Brazil’s ICT sector despite local and global woes – BNamericas English

Riding the wave of digital transformation, the Brazilian ICT sector keeps attracting massive investments despite domestic and international challenges that are related to economy, politics and global supply chains.

Investments are pouring in from both local and foreign companies despite high uncertainty regarding the country’s economic outlook for 2022 and presidential elections in October of that same year, shows research from KPMG and Transactional Track Records (TTR).

Of the operations mapped by KPMG from January to September, the majority of M&As were domestic deals (885) between Brazilian companies.

In second place with 409 deals were CB1-type operations, which comprise those in which a foreign company acquires equity in a Brazilian company.

“This quarter was the best in the history of domestic transactions and CB1 of the entire historical series, mainly resulting from investments in digital transformation and innovation carried out by financial and strategic investors from various business segments,” said Luis Augusto Motta, a partner in the technology, media & telecom area at KPMG, in a recent report.

The first nine months represented the strongest M&A period in Brazil since 1996, the year when KPMG started publishing such surveys.

There were 1,361 operations during January-September, surpassing 1,231 in the full year of 2019, when a new record was set.

Dealmaking was led by internet companies, registering 442 operations, followed by information technology (233), financial institutions (122), service companies (65), technology, media and telecommunications (46), and hospital and clinical analysis (46).

In the January-November period, TTR and law firm TozziniFreire Advogados recorded 2,224 transactions in Brazil. 

The figure includes M&As, private equity, venture capital and asset acquisitions and represents a year-on-year increase of 51%.

The transactions were worth 468bn reais (US$81.6bn) – with 33.4bn reais in November alone – up 150% y-o-y. 

The technology sector was again the most active, accounting for 818 transactions that represented a y-o-y increase of 68%, followed by the financial and insurance sector with 408 operations.

In comparison, the combined total of 2019 and 2020 for the technology sector was 982 transactions.

Image source: TTR’s November report

As with KPMG, TTR’s figures for January and November indicate a strong acceleration of consolidation among Brazilian firms, while there has also been a 68% y-o-y increase in foreign investment in the technology and internet sectors.

Deals in which US companies acquired firms in Brazil registered growth of 76% in the first 11 months.

Enterprises from the US and Argentina, with 206 and 34 transactions, respectively, were the ones that invested most in Brazil in the same period, according to TTR.

For their overseas deals, Brazilian companies chose mainly the US as their investment destination, with 48 transactions totaling 2.2bn reais in January-November, followed by Colombia with 15 transactions and Mexico with 14 operations.

In Brazil’s private equity space, TTR recorded 115 transactions, down 0.8% y-o-y, for a total of 52.7bn reais.

There were also 643 venture capital deals in January-November, growing 54% and worth a combined 55.2bn reais, while asset acquisitions rose by 15% to 238 (96.4bn reais).

RECENT DEALS

Last week saw Brazil-based multinational technology service provider Tivit unveil the acquisition of Sensr.it, a platform for integrated service management and IT governance solutions.

That was Tivit’s fourth purchase since …….

Source: https://www.bnamericas.com/en/features/how-investments-keep-pouring-into-brazils-ict-sector-despite-local-and-global-woes

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