According to the lawyers of the international law firm Cuatrecasas (Peru), this year the fusions and acquisitionsknown as M&A, will achieve a progressive reactivation with the closing of several small and medium operations and the signing of at least three large operations, as a result of the perception of less political risk.
“My impression is that the market is going to reactivate and many of the operations that were frozen last year will be closed because, although the political risk is present, all the players already have greater predictability than what awaits us with this Government and Although it sounds incredible, we have become accustomed to managing uncertainty. In addition, precisely due to the increase in country risk, many international investors, such as investment funds, will have to disinvest in the country”commented Kiomi Osorio, senior associate of the international firm Cuatrecasas.
Another cause for the reactivation of the M&A sector is the experience obtained with the first merger control authorizations from INDECOPI. For his part, Oscar Trelles, a partner at Cuatrecasas, recalled that, in the last quarter of 2021, Cuatrecasas advised Vinci on the first merger control authorization obtained from INDECOPI, which marked a milestone in mergers and acquisitions processes.
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“Being the first merger control operation approved under the ordinary procedure is an important milestone that required a lot of coordination and technical work because it was a global operation in more than 20 jurisdictions, with several companies in Peru. This shows that the procedure works and is a highly technical analysis, which gives confidence to the market.Trelles added.
According to Cuatrecasas lawyers, in 2022 the most active M&A sectors will be logistics, infrastructure, agro-export, mining and mining services, and technology.
“We will see interesting movements in startups, where important investors could choose to carry out ‘cash in’ operations in order to help companies achieve growth in the market. In the case of the agricultural sector, we have seen the appetite of groups to acquire distributors in different countries”indicated the senior associate of Cuatrecasas.
Finally, Trelles specified that in 2021 the market had more movement compared to 2020, although it was not what was expected. It was only in the fourth quarter of the year that operations that had been frozen by the political situation began to close, especially strategic purchases such as Groups in the health, retail, consumer and technology sectors because they represented less political risk.
“2021 was an unusual year, because in addition to having the pandemic, there was the election of an anti-system candidate who put a cold shoulder on the market and paralyzed several M&A processes that we were close to signing. This 2022 we are seeing a rebirth of the appetite for M&A in Peru, thanks to the reopening of the post-pandemic economy and to the fact that the Peruvian legal system has shown to have locks against radical changes in it, although we are concerned about the impact that the war on Ukraine can register in the short term”Trelles said.
The continuity of the health crisis, the political risk during the electoral period, the first months of the new government, as well as the application of the law that establishes the prior control of business concentration operations, and recently the war in Ukraine, caused a lot of uncertainty . However, as happened at the end of 2021, in 2022 the different players in the market will continue devising strategies that will allow closing operations that were frozen by the political and health situation, Cuatrecasas’ lawyers concluded.
