Foreign investors bet on Brazil's recovery
Brazilian assets have become so cheap that some analysts even
Published on 16/05/2016 - 10:34 By Giselle Garcia, correspondent for Agência Brasil - London
It seems that the senior managing director and head of Brazil and Southern Cone operations for Control Risks global risk consultancy, Geert Aalbers, is in the right place at the right time. The firm, which has been doing business in the country for about 20 years, has reported substantial growth since last year.
Control Risks sees good opportunities in a number of sectors, including infrastructure, renewable energy, health, and education. “Brazil is a huge country with great needs. The new development cycle will require investment, and the government is going to work to improve incentives and returns for investors,” Aalbers said.
Without mentioning any numbers, Aalbers—who has been based in Brazil for 18 years now—says 2016 will be the best year for the company in Brazil. The demand for integrity and political risk analysis, due diligence and investigations for mergers and acquisitions has increased significantly in the wake of the political crisis and the Petrobras scandal. “We have seen a lot of interest from international investors, private equity funds, pension funds, large conglomerates, everyone is trying to understand the scenario and looking for good opportunities to set foot in the Latin American market,” he said.
Brazilian assets have become so cheap that some analysts even described Brazil and other emerging markets as the deal of the decade. After all, Brazil's currency has depreciated significantly against the dollar in 2015 and, despite a recovery in the first months of this year, is still at its lowest value since 2003.
With the recession and the real depreciation, Brazilian businesses have never been so cheap. Many of them, impacted by the crisis and the corruption scandal at Petrobras, are selling many of its assets. That is the case with BTG Pactual, the leading independent investment bank in Latin America. Since the bank's founder and CEO André Esteves was arrested on charges of trying to interfere with the investigations into the corruption scheme, BTG has divested important assets, including a controlling stake in Swiss-based BSI bank and shares in Brazil's largest private hospital chain. In the first quarter of this year alone, BTG has been in ten deals totaling $2.7 billion.
With debts in excess of $130 billion, Petrobras is also planning to sell $15 billion worth of assets by the end of the year.
Robert Abad, founder of California-based EM+BRACE consultancy for emerging markets, says Brazil continues to be one of Latin America's most promising countries. “If a country has strong foundations, if progress has been made over the years, so when a crisis like this happens it is the right time to invest there,” he says.
Data from Dealogic financial platform shows that the mergers and acquisitions in Brazil totaled $22.59 billion in the last quarter of 2015, the best quarter since 2013, and the third best since this data was first reported in 1995.
Caio Mesquita, founder of Empiricus independent consultancy, says the market should continue to respond positively to the change in Brazil's government. “If you are long-term mindset, then this is a suitable time to invest in Brazil.”
Translated by Mayra Borges
Fonte: Foreign investors bet on Brazil's recovery
Edition: Lílian Beraldo / Augusto Queiroz