There has been no shortage of activity for Brazilian financial
lawyers this year – even though the
region’s previously vibrant equity market slowed
markedly from the year before. In Brazil the focus this past
year has been on M&A, DCM, structured finance and
infrastructure finance. Mattos Filho again leads a strong group
of Brazilian firms in straddling both M&A and capital
"On the M&A side things continue to be hot," says
José Queiroz, a partner at the firm. "There has been an
important contribution from the private equity firms that have
focused on Brazil."
Queiroz reckons about 100 M&A deals were completed in
Brazil in 2012, up 10%-15% from 2011. This will continue in
2013. There should also be an increase in international
companies acquiring in Brazil.
In September, the Carlyle group agreed to acquire 60% of
Brazilian specialty furniture retailer Tok&Stok from
founders Ghislaine and Regis Dubrule, for 750 million reais
($372 million), highlighting the private equity story
– expected to flourish in 2013 on the back of funds
raised in 2011-2012 – and the international situation.
Mattos Filho advised the sellers.
Other deals that underscored the international M&A
component include advising Spain’s Abertis on its
purchase with Canada’s Brookfield of a majority
stake in OHL’s Participes en Brasil. The firm also
advised Argentina’s Techint on the acquisition of
Mattos Filho represented Eike Batista’s
companies on two of its biggest foreign investments –
the $2 billion purchase of 5.63% of EBX by Mubadala Development
Company and the formation of a joint venture between MPX
Energia and Germany’s E.On.
Mattos Filho worked on the Itaú 10 billion-plus reais
purchase of the stake in credit card processor Redecard that it
didn’t own. Brazil’s domestic
consolidation story should be a strong theme in 2013.
The firm also represented BG Group as it sold 60.1% of
Comgás to Cosan for $1.79 billion.
Changes in the procedures at government competition
regulator Conselho Administrativo de Defesa Econômica
(CADE), which will approve deals before they close rather than
after, will mean more work for firms. However, this is unlikely
to slow deal volume.
Although the past year in Brazil’s equity
capital markets was far from spectacular, Mattos Filho
nevertheless advised on one of the standout transactions, a
1.76 billion real follow-on for transmission company Taesa.
"Equity capital markets will get better in 2013," says
Queiroz. "But it is difficult to anticipate to what
Successful Brazilian deals need a significant international
component, so a large part of this depends on good news from
the US and Europe, he says.
DCM activity has more than made up for the dip in ECM. Low
US interest rates should keep international offerings from
Brazilian issuers interesting to investors.
This year, optimism has returned to the domestic market as
well. Lower Brazilian rates mean investors are looking at
domestic corporate bonds. Brazil’s huge
infrastructure requirement means more borrowing to pay for
ports, airports, bridges and roads.
Mattos Filho was involved in both issues of the new
infrastructure debenture asset class that straddles these two
trends. The domestic bonds offer tax exemptions to investors
due to its use of proceeds.
AutoBan, the subsidiary of Companhia de Concessões
Rodoviárias, became the first widely marketed
infrastructure debenture, and priced in October a 1.1 billion
real transaction. Queiroz says with the first transaction done
– and which took almost a year to get through
– it will be simpler to do such deals in the future.