JP Morgan:"LatAm corporates more investable than other emerging markets"

August 09, 2010 7:03 AM

Private equity deals done this year in Latin America are already worth nearly two-thirds more than for all of 2009, according to new research, showing funds are rapidly returning to the region after retrenching during the crisis.

A report today by the Emerging Markets Private Equity Association shows US$2.3 billion has been raised for investment in the region already in 2010, just topping last year's full total. Investment totals are already at US$2.1 billion, against US$1.3 billion for all of last year.

The team at JP Morgan – the head of which is opening Latin Lawyer's Private Equity Conference in New York on 1 October – sees deep opportunities in Latin America, led by the region's vastly improved corporate governance, diversifying stock markets, strong economic fundamentals and rising domestic demand.

'Latin America is really ahead of the other emerging markets in terms of improving corporate behaviour and profitability,' Claire Simmonds, a client portfolio manager in the JP Morgan Emerging Markets Income fund, told fundstrategy.com. 'It emanated from there and spread to Asia and elsewhere.'

The Emerging Markets Income fund went live on 29 July, and is yielding a 4 per cent return. The trust is 14 per cent invested in Brazil, which Simmonds says is looking particularly interesting this year because it has fallen somewhat off the radar for investors through concerns over weak commodity prices, the prospect of monetary tightening and an upcoming election. She, however, argues that the scale of these problems has been exaggerated.

Latin Lawyer's conference at the Waldorf-Astoria on 1 October will look in depth at how to make deals happen in Brazil, featuring an interactive session led by Horacio Bernardes-Neto of Xavier, Bernardes, Bragança, Sociedade de Advogados and featuring Daniel Pine of Marathon Asset Management in Brazil and Martin Sanchez, head of Latin American M&A at Bank of America Merrill Lynch (TBC). The conference is chaired by Todd Crider of Simpson Thacher & Bartlett LLP.

According to Empea, Brazil accounted for two of the five largest deals globally so far this year, with overall investment reaching US$1.5billion, against US$989 million in 2009.

'This trend towards further investment into Brazil looks set to continue, " says Sarah Alexander, president of Empea. "Of all the funds recently raised for Latin America, as much as two-thirds of capital raised could feasibly be directed to Brazilian opportunities. We're also seeing marked interest in the investment potential of other regional opportunities, particularly in Colombia and Peru. It is encouraging to see the markets recognise the growth potential of Latin America.'

The private equity conference also features leading speakers from across the region discussing the latest trends in their jurisdiction, from the regulatory outlook in Brazil, Chile and Mexico, to the next hotspots across the region, such as Panama and Argentina.

(Source: Magazine LatinLawyer)

9 August, 2010