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DEALS OF THE YEAR: Best Law Firm: Brazil

Jan 1, 2013

Mattos Filho

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 markets activity.

"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 Usiminas.

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 extent."

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. LF



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