15 de enero de 2016 / 19:07 / hace 2 años

Bradesco tops Brazil's M&A ranking, sees busy year for takeovers

6 MIN. DE LECTURA

* Value of Brazil's M&A deals slumped 30 pct last year

* Bradesco tops ranking helped by $5.2 bln HSBC deal

* Bankers see M&A rising as recession gains momentum

* Multiples show Brazilian assets not in a fire sale

By Guillermo Parra-Bernal and Tatiana Bautzer

SAO PAULO, Jan 15 (Reuters) - Banco Bradesco BBI SA, which ended last year as the top-ranked advisor for mergers and acquisitions in Brazil for the first time in nearly two decades, expects a worsening recession and weakening currency to fuel takeover activity in coming months.

In a year when Latin America's largest economy shrank the most in a quarter century and merger financing waned, Bradesco BBI boosted revenue from M&A advisory by 30 percent, showcasing the ability of CEO Renato Ejnisman and bankers Leandro Miranda and Alessandro Farkuh to clinch bigger and more complex deals.

The investment banking unit of Banco Bradesco SA, Brazil's second biggest private-sector bank, advised on $13.609 billion worth of deals last year, data compiled by Thomson Reuters deal intelligence showed on Friday.

It last topped local M&A rankings during a wave of state asset sales in 1997.

Bradesco BBI worked on 25 deals last year, trailing local rivals Itaú BBA SA and Grupo BTG Pactual SA, which advised on 50 deals and 46 deals, respectively, the data showed. São Paulo-based BTG Pactual also ranked second in terms of deal value, after working on $13.379 billion worth of transactions.

In terms of deal volume, Bradesco BBI got a boost in rankings after handling Brazil's biggest acquisition last year - Banco Bradesco's $5.2 billion takeover of HSBC Holdings Plc's local unit in July.

In total, companies announced at least $45.959 billion worth of M&A transactions in 2015, the lowest value in a decade and down 30 percent from 2014, the data said. The number was severely impacted by a 32 percent slump in the value of the Brazilian real against the U.S. dollar.

In real-denominated terms, the value of Brazil M&A remained fairly stable last year, the data showed.

About 640 deals were announced, 10 percent more than the 582 transactions of 2014. Dozens of deals, however, stalled amid economic and political turmoil, including efforts to start impeachment proceedings against President Dilma Rousseff.

Ejnisman told Reuters that M&A activity this year will be fueled by the growing need among large groups to reduce a record debt burden by selling assets. Many Brazilian firms are facing rising problems in rolling over or repaying their obligations.

Tie-ups could also be fed by the ongoing fallout from a massive corruption probe at state firms that involved large engineering conglomerates, which might need to shed assets, he and other bankers said.

"Consolidation will be the name of the game, because many players will need to either reduce their leverage, or cut their costs, or try to set off a platform for future growth," he said.

Local Dominance

For the second year in three, Bradesco, Itaú and BTG Pactual ranked among the top five M&A advisors in Brazil, highlighting their long-term push to crowd out foreign rivals that traditionally dominated M&A activity.

Unlike 1997, when Bradesco topped the ranking thanks to proprietary deals, last year it advised more financial groups, as well as multinational and local firms, said Miranda, who is Bradesco BBI's head of investment banking.

Many bankers expect that long-awaited asset sales at state-controlled oil producer Petróleo Brasileiro SA and other companies will start to gain traction early in 2016.

"There is growing interest for Brazilian assets from strategic investors and financial sponsors as they focus more on the opportunity than on the political turmoil," said Luiz Muniz, head of Latin America at Rothschild, Brazil's No. 3 M&A advisor in terms of deal value last year.

Advisory work should gain momentum as buyers focus on the long-term advantages of Brazil, a market of 200 million people, and seek top-notch assets made available by the recession and a weaker currency, said Marco Gonçalves, head of M&A for BTG Pactual.

While short-term currency swings seldom affect long-term investment decisions such as takeovers, some bankers said buyers worry that last year's plunge in the real could extend into 2016, weighing down returns.

No Easy Bargains

Available assets include a stake in a company that operates Viracopos international airport in Campinas, the fuel distribution unit of Petrobras, and more than two dozen companies in which BTG Pactual's merchant banking unit and clients have stakes.

BTG Pactual is exiting assets following the arrest of founder André Esteves, which alarmed investors and clients. Those assets include parking lot, drugstore and fitness chain companies, pools of loans, and an oil and gas producing venture in Africa.

Even as Brazil braces for the longest and deepest recession since 1901, bargains are scarce, BTG Pactual's Gonçalves said, pointing to the multiples paid by acquirers last year.

Singapore's GIC Pte Ltd and Carlyle Group LP paid 11 times annual operating earnings for 36 percent of Rede D'Or São Luiz SA, Brazil's No. 1 hospital chain. In November, J&F Investimentos SA, which oversees investments for Brazil's billionaire Batista family, paid a 32 percent premium for a majority stake in apparel maker Alpargatas SA.

That same month, Coty Inc clinched a last-minute deal for the beauty care unit of Brazil's Hypermarcas SA, paying a pro-forma 25 times earnings multiple to gain an edge in one of the world's top consumer markets.

"Many believed that takeover costs would fall sharply in dollar terms, and they did, but valuations remained surprisingly resilient," said Ricardo Lacerda, founding partner of BR Partners Banco do Investimento, the top-ranked local independent advisor last year. "Brazil is not in a fire sale."

Editing by Daniel Flynn and Paul Simao

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