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
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