According to a PwC Argentina report on contracts practice: “Connecting and acquisitions (M&A) in Argentina 89 vs. 84), the amount traded was 53% lower (US$1,800 vs. US$3,700 million).
In 2023, the value of operations declined due to Argentina's volatile and complex economic and political environment.
Despite the crisis, foreign buyers continued to be the protagonists of the market as they accounted for 57% of the shares. transactions carried out. 60% of the cases involving foreign buyers involved multinational groups that already had operations in the country. The rest were first trips to Argentina,
Mainly technology, mining and Energy. Unlike what happens in other parts of the world where financial buyers (such as private equity funds) are more relevant, they continue to be underrepresented in Argentina.
By 2023, there were fewer than three transactions A financier was the buyer, due to the country's lack of financial and economic predictability. Similarly, as happened in 2022, in 2023, MNCs continue to leave the country. That's why there were at least 17 transactions where a multinational conglomerate sold everything.
or part of its operations in Argentina.
Ticket volumes were down, with most being under US$ 20 million
And there were at least five others transactions For amounts above US$100 million, a level slightly lower than in 2022, with the difference that this year is not transaction 1,000 million USD range.
while, Energy & Resources was the dominant sector as it accumulated 43% of contracts and more than 90% of trade value. Most active sub-sector mining (20 operations). TMT (Technologies, Media and Telecommunications) is the second sector as the technology sector has declined due to the global recession. In food and agriculture, a sector where Argentina has always been competitive, a total of 10 transactions were registered. In financial services there were 6 transactions related to banking, insurance and asset management segments.
Predictions 2024
“Javier Millay's government creates expectations for a strong increase in M&A deal flow in the coming years. We don't see this happening immediately, but rather gradually, and will be related to the progress the government can get on various fronts. Working (regulatory, macroeconomic, financial, labor, etc.) M&A investments in general Let's remember that medium-long-term investments, and above all, require predictability,” says Juan Procaccini, partner at PWC Argentina. Implementation of contracts.
For this reason, volatility in the local economy is expected to continue in the short term, including high levels of inflation, exchange rate gaps and a decrease in activity levels. This environment of normalization will mean changes in business models and profit equations, where sectors are more favored than others. “Sectors such as mining, oil and gas, technology and agribusiness will continue to be natural producers. transactions. These are sectors where investors place greater emphasis on access to capacity-resource-markets than on local economic conditions. If the government creates the right conditions, these sectors have the potential to grow further,” comments Juan Trippier, Director of PwC Argentina's Contracts Practice.
A strong recovery in M&A activity is expected in 2024. This optimism is based on the recent correction in stock markets, downward expectations of inflation levels and interest rates, and the need for many companies to adapt and adapt their business models, which is the essence of contracts. “Considering the possibility of having a broad and deep M&A market, 2024 can be considered a year of transition, short, medium or long term, for all those who are thinking about selling or opening up their company's capital, this may be a good time to start preparation. M&A processes are intense and demanding, And companies that have prepared themselves will be more likely to succeed,” concludes Ignacio Aquino, partner at PwC Argentina in the Contracts practice.
* Ignacio Aquino, Partner at PwC Argentina.
* Juan Procaccini, Partner at PwC Argentina.
