Brazil buying Brazil- some insights from the KPMG report

KPMG in São Paulo

KPMG released its latest report on M&A in Brazil. The trend in the first quarter was the best in the country for the period when 167 transactions were recorded. The number is 4% higher than the same period of 2010.

Brazilian companies are leading procurement, with 82 transactions. What do you make of it?

It is now common knowledge that the strong domestic scenario makes the Brazil an attractive place for investment. It is true for investors everywhere: in Brazil or abroad.

On top of that,  the resumption of IPOs also be a driving factor for this movement, according to Luis Motta, a partner at KPMG in Brazil.

Investing at home, relenting internationalization?

This also means a down turn for the internationalization of Brazilian companies.  KPMG recorded nine Brazilian acquiring foreign operations abroad. The number is 44% below the 16 agreements of 2010. The operations of Brazilian foreign buying in Brazil also fell, from 31% when comparing the first quarter of 2011. There were 11 such operations in that quarter.

My impressions on this data

Brazilian companies investing more in Brazil rather then abroad might be a momentary effect rather then a tendency. Brazilian companies are aware of the importance of internationalization. It is a complex process with many difficulties, but strategically critical in the future.

It might also be that Brazilians are more fit to seize the domestic opportunities.

How did foreigners do?

Foreign enterprises registered the highest growth, accounting for 34 operations in the Brazilian foreign buying period,  a growth of 62% over the same period last year. The transactions of a foreign company acquiring a foreign established in Brazil were 47% higher than the same quarter of 2010 and totaled 28 transactions.

Considering the country of origin of those who have acquired foreign companies in Brazil, the highlight was the U.S. companies (with 27 transactions), followed by France (with five transactions), Germany (four), and the UK (three).

Information technology leading investment

The sector where the largest number of operations was to information technology, with 22 transactions. Following appeared Service Companies, with 13, Real Estate, 11, Telecom and Media, with nine and Food, Beverages and Tobacco, with eight.

Comparison with  3Q2010

Despite being the strongest first quarter of KPMG’s survey time series, the result was 14% lower compared with the fourth quarter of 2010. According to KPMG, the first quarter is usually weaker than the year-end.data so expectations are that M&A activity in Brazil is promising.

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About Hildete Vodopives

Hildete de Moraes Vodopives is founder of Brazil Global and of the Harvard Strategists Bureau. She is a member of the Brazilian Investment Analysts Association (APIMEC-Rio) where she served as Corporate Relations Director and later, on the board. Hildete advises companies doing business in Brazil. She lives between Paris and Rio and is a member of the Harvard Club of Paris and of the Mercosur Women’s Forum.
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