Brazil Transactions
Brazil Transactions
Brazil Transactions
Industry Insights
Winter 2024

Executive Summary
Executive Summary
Executive Summary
Executive Summary
Executive Summary

1,400 M&A transactions were registeredin Brazil in 2023, a 9.3% decrease in thenumber of announced transactions.
2023 period registered 22 follow-ons,raising over BRL 32 billion (+USD 6.4 bn).
For the second consecutive year, there
were no IPOs.
Total market capitalization of the Brazilian
Stock Exchange (Bovespa) as of December
31, 2023, was over USD 874 bn.

2M&A Market Overview
OverviewIn 2023, volume in Brazil M&A activity declined to 1,400 total transactions, representing a 9.3% decrease compared to the same period in 2022.
Sectors that were more active included financial / insurance, technology, energy and equipment, and food and beverage.
Brazil also experienced declining public offerings in 2023 - IPOs (0) and follow-ons (22) – so M&A activity should be poised to take advantage andshow strength in the coming years.

47.9%

.

1,627

19.4%

1,543

14.5%
7.2%
770

2013

731
-5.1%

2014

837

775

831

9950.2%

1,100 10.6%

833
-5.2%

-7.4%

2015

Source: Kroll market research as of December 31, 2023

2016

2017

2018
# of Transactions

1,400

2019
Variation %

2020

2021

2022

-9.3%

2023

3

M&A Market Overview, Continued
Number of Announced Deals (Jan-Dec)

By Number of Announced Deals(December 31, 2023)

180

140

147
130

120
99

100
80

162

159

160

125 123

146
142
133

127

142

141
115

135
126 125123
118 117118 116

108

127

111

109

154
154

150
131
119

134
114

121

33.2%

93

66.8%

76

60
40

Strategic vs. Financial Buyer

200January

February

MarchApril

MayJune2021Source: Kroll market research as of December 31, 2023

2022

JulyAugust

September

OctoberNovember December

2023

4

Strategic Buyers Selected Transactions
In July 2023, Vale [NYSE:VALE], a Brazilian
In April 2023, L’Oreal, Brazillian company in personalminer, has signed a binding agreement to sellcare products, has reached an agreement to acquire

10% stake of Vale Base Metals Limited to Manara

Aesop (Natura & Co).The deal was closed for around

Minerals, a joint venture between Ma’aden (SaudiUSD 2.5 bn.

Arabia) and PIF, and an additional 3% to EngineNo. 1, for a total of USD 3.4 bn.

In August 2023, Marfrig [BVMF:MRFG3], the Brazilian foodcompany, has reached an agreement to sell certain cattle
and lamb slaughtering units in South America to Brazilianpeer Minerva [BVMF:BEEF3].. The agreement implies anIn February 2023, Equifax Inc. [NYSE:EFX] announced anagreement to acquire Boa Vista Serviços [BOAS3:SAO],
the second-largest credit bureau in Brazil. The agreement
implies an estimated total enterprise value of USD 596 mnestimated total enterprise value of USD 1.5 bn.

In October 2023, Darling Ingredients Inc (NYSE: DAR), anIrving, Texas-based provider of rendering, recycling andIn March 2023, PE firm Actis LLP acquired 100% of therecovery services and solutions to the food industry, has

capital of DHF, the holding company that controls Nabiax’s

reached an agreement to acquire Gelnex, a Brazil-based

portfolio of data centers in Latin America, in a deal valued inleading global producer of collagen products for

USD 500 mn.

approximately USD 1.2 bn in cash

In December 2023, Engie Brasil EnergiaIn September 2023, Nestle has reached an agreement[BVMF:EGIE3] has sold 15% of its shares into acquire Kopenhagen, a Brazilian producer ofTransportadora Associada de Gás [TAG] to Caisse dechocolates, for around USD 605 mn

dépôt et placement du Québec [CDPQ], a Canadian
institutional investor for around USD 800 mn

Sources: S&P Global Market Intelligence and Mergermarket
Note: All trademarks, trade names or logos referenced herein are the property of their respective owners.

5Private Equity and Venture Capital
In 2023, financial investors completed approximately BRL 50 bn in transactions in Brazil, with VCs significantly outperforming PEs
investment. In 2023, financial sponsors were present in 33.2% of the transactions, with investments of BRL 98.2 billion.

Investments and No. of Deals per year (BRL bn)
440

465
6.69

22.3
345
317
46.5
255
202

1.2

159

157

175

10.8
14.6

0.9
17.3

0.8
10.5

2015

2016

41.6…

6
14.8

14.3
7.5
2017

2018
Private Equity

Source: ABVCAP

37.2

2019
Venture Capital

9.1

7.3

2020

2021

2022

2023

# Of Transactions

6Financial Buyers Selected Transactions
In August 2023, Abcuro, a Newton, MA-based

In May 2023, Talanx Group [ETR:TLX], a German

clinical stage biotechnology company, has

insurance group, acquired the businesses in Brazil,

secured USD 155mn in an oversubscribed Series

Chile, Colombia and Ecuador from Liberty Mutual

B financing co-led by Redmile Group and Bain

Insurance Inc., a Boston, Massachusetts-based

Capital Life Sciences and Eurofarma Laboratorios

insurance giant, for USD 1.48 bn.

S.A.

In March 2023, Pismo Solucoes Tecnologicas, a venture
capital-backed Brazilian cloud-native core banking andpayments platform, has received a USD 1.4 bn acquisition

In August 2023, Bain Capital acquired 100% ofFogo de Chão, Brazillian food retail operation for
an enterprise value of USD 1.1 bn.

offer from Visa [NYSE:V].

In June 2023, ACG Acquisition Company Limited[LSE:ACG], a special purpose acquisition company (SPAC),
announced that it is to acquire the Atlantic Nickel mine andthe Mineraçao Vale Verde copper mine in Serrote for anenterprise value of USD 1 bn.

In December 2023, UnitedHealth Group, owner of Amil,agreed to sell the health plan operator to businessman

José Seripieri

José Seripieri Filho, who founded Qualicorp, but later
left the company in 2019. The operation totaled USD

2.2 bn.

In September 2023, JOKR, a grocery and retail delivery
company, has raised USD 50mn in a Series D funding
round at USD 800mn in post-money valuation by Pernod
Ricard S.A. and others.

In November 2023, Apollo Global Managementbacked Starboard Partners, a Brazil-based asset
manager, reached an agreement to acquire AB
Concessoes, a Brazil-based Infrastructure and tollroad operator. The transaction is valued at USD
719.2 mn.

Sources: S&P Global Market Intelligence and Mergermarket
Note: All trademarks, trade names or logos referenced herein are the property of their respective owners.

7Equities Activity
Overview
Activities in the capital market in 2023 remained at the same level as 2022, with only 22 follow-ons totaling BRL 32 bn. Since January 2022, Brazil
capital markets has had no IPO’s.
The inflation in Brazil (measured by Índice de Preços ao Consumidor Amplo [IPCA]) reached an accumulated 4.62% in 2023. Brazil’s Central Bank(BACEN) started a review and the country’s basic interest rate (named SELIC) was reviewed to 11.75% on December 31, 2023 after sitting at 13.75%
since the end of 2022. Market expectations are 9.0% by end of 2024. Fitch Ratings confirmed Brazil's sovereign rating at “BB”, with a stable outlook.

Number of IPOs and Follow-Ons (Brazilian Companies)

IPOs and Follow-Ons Funds Raised (USD bn)

50

26.8

28.4

28.1

40
31 31

2616
914201510120162017

2218632018
IPO

6.772019

13.1
7.7

6.0

2020

2021

002022

2023

FOLLOW-ON

Sources: Company press releases, B3 (Bovespa) and S&P Global Market Intelligence as of December 2023
The IPOs do not include Brazilian Depositary Receipts (BDR).

6.4
3.9

3.2
2015

2016

2017

2018

Total USD bn

2019

2020

2021

2022

2023

Eletrobras (Privatization)

8

Listed Brazilian Companies
As of December 31, 2023, there were 270 Brazilian companies listed on B3 (Brazilian stock exchange). With no recent new listings (no IPOs in 2022 and2023), the exchange experienced considerable sector diversification. The consumer durables and apparel sector accounts for the highest number ofcompanies (40 companies) but only 2.1% of the total market capitalization. Utilities (35 companies) account for 14.1% of the total market capitalization,
followed by materials (28 companies), accounting for 14.6%.

Number of Companies

Market Cap (US$ bn)
40

Consumer Durables and Apparel$18,358.1

35

Utilities$123,381.0

28

Materials$127,565.3

28

Capital Goods$43,576.0

17Transportation$48,738.4

17Banks$186,507.8

17Food, Beverage and Tobacco$73,384.2

14

Health Care Equipment and Services$28,843.3

12Consumer Services$7,406.6

11Energy$136,228.2

10

Commercial and Professional Services$4,731.1

8Media and Entertainment$1,031.2

4

Software and Services$5,126.5

6Insurance$26,564.6

7

Telecom Services$28,505.2

5Automobiles and Components$1,908.3

5

Technology Hardware and Equipment$2,235.3

4

Pharmaceuticals, Biotechnology and Life Sciences$5,647.1

2

Household and Personal Products$4,915.2

9Sources: CVM filings, company press releases and S&P Global Market Intelligence as of December 2023

Ibovespa/B3 Key Sectors
EBITDA Valuation Multiples

Health care: 11.2x
IT/ Related Services: 4.8x

Ibovespa/B3 Key Sectors
EBITDA Valuation Multiples

Utilities: 6.8x

Ibovespa/B3 Key Sectors
EBITDA Valuation Multiples

Education: 8.5x

Industrials: 10.7x

As of January 16 2024
Source : Capital IQ
Considers only positive EV/EBITDA multiples
10Brazil B3: Top 10 Companies by Market Capitalization
Company Name

Incorporation

Industry Group

Petróleo Brasileiro S.A. - Petrobras (BOVESPA:PETR4)

BrazilMaterials

Vale S.A. (BOVESPA:VALE3)

Ambev S.A. (BOVESPA:ABEV3)

Itaú Unibanco Holding S.A. (BOVESPA:ITUB4)

Banco Bradesco S.A. (BOVESPA:BBDC4)WEG S.A. (BOVESPA:WEGE3)

Banco BTG Pactual S.A. (BOVESPA:BPAC3)

Banco Santander (Brasil) S.A. (BOVESPA:SANB4)

Banco do Brasil S.A. (BOVESPA:BBAS3)

Itaúsa - Investimentos Itaú SA (BOVESPA:ITSA4)

BrazilBrazilBrazilBrazilBrazilBrazilBrazilBrazilBrazilMarketCapitalization(USD mn)% of52-WeekHigh

Price to LTM
Earnings
Multiples$84.602,93

36,34

3,65x

$75.754,59

114,396,68x$46.677,70

18,78

14,33x$46.608,87

32,61

10,24x$36.168,06

23,91

13,26x$26.264,20

42,26

28,85x$23.140,79

22,360,00x$23.043,42

22,32

11,93x$20.370,13

40,36

4,65x

$17.004,31

9,85

7,49x

EnergyFood, Beverage and Tobacco

BanksBanks

Capital Goods

Diversified Financials

BanksBanksDiversified Financials

Sources: CVM filings, company press releases and S&P Global Market Intelligence as of December 31, 2023

11Brazil: 2023 Follow-Ons
Company Name

Industry Classification

Date

Value (USD Million)

Assaí

Food Retailers

March 20, 2023

812.8

HapvidaMed Hosp Serv. Anal and Diagnostics

April 14, 2023

211.8

Dasa

Med Hosp Serv. Anal and Diagnostics

April 20, 2023

334.7

OrizonWater Utilities

May 2, 2023

73.9

Smart FitSports

May 31, 2023

118.3

Oncoclínicas

Med Hosp Serv. Anal and Diagnostics

June 22, 2023

179.4

CVC Brasil

Travel and Tourism

June 26, 2023

110.0

Localiza

Car rental

June 28, 2023

900.0

Vamos

Car rental

June 30, 2023

260.5

Direcional

Real State

June 29, 2023

89.5

Hidrovias

Marine and Water Transport

July 12, 2023

91.9

Sources: S&P Global Market Intelligence and B3 as of Dec 31, 2023

12

Brazil: 2023 Follow-Ons (contd.)
Company Name

Industry Classification

Date

Value (USD Million)

MRV

Real Estate

July 13, 2023

207.1

BRF

Meat Poultry and Others

July 14, 2023

1,117.9

Viveo

Health and Retail and Distribution

August 1, 2023

256.2

Copel

Electric Utilities

August 8, 2023

1,042.6

Tenda

Real Estate

September 4, 2023

47.6

Casas Bahia

Electronics and Household Appliance

September 13, 2023

126.6

BR Partners

Financial Intermediaries

September 26, 2023

43.1

Ambibar

Water Utilities

October 31, 2023

146.5

Metal Leve

Transportation Equipment

October 31, 2023

82.1

Aeris

Machinery and Equipment

November 30, 2023

81.4

Software and Services

December 14, 202380.9

Total

6,423.8

Infracomm

Sources: S&P Global Market Intelligence and B3 as of Dec 31, 2023

13Ibovespa and Brazil Basic Interest RateIBOVESPA X SELIC (Interest Base Rate)
140000.00

15.00%

130000.00

14.00%
13.00%

120000.00

12.00%

110000.00

11.00%

100000.00

10.00%

90000.00

9.00%

80000.00

8.00%

Brazil IBOVESPA Index (^IBOV) - Index Value

SelicIndex

Dec-22

Dec-23Δ%

Index

Dec-22

Dec-23Δ%

Brazil Ibovespa

106.376134.19326.2%

Interest Base Rate

13.25%

11.75%-2%

52-Week

Ibov Points

52-Week

Ibov Points

High134.193

High13.75%

Low

97.926Low

11.75%

Δ%

37%%

Δ%-2%

Sources: S&P Global Market Intelligence as of December 2023
XP inc. Projections (IBOVESPA)

14

Ibovespa 2023 Review and Some Key Facts
PeriodMonth

Selected Comments
2022

LTM

5,38%

28,82%

R$ to 1 US$%Var.

FY 2023. Brazil Basic Interest base rate (SELIC) reduced by 1 point to 11.75%. Fitch Ratings confirmed Brazil's sovereign rating at 'BB', with a stable outlook.
. The 5-year CDS (Credit Default Swap) fell to 136.4 basis points and reached the lowest level for the indicator since
March 2020, when it was 132

Dec-23# of

IPO: none
F-ons: 1
M&A: 121

28,82%

4,85-1,22%

4,91-6,48%

5,25

5,00%

5,00

2,04%

4,90

1,66%

IPO: none
F-ons: 3
M&A: 114
Nov-23

12,50%

15,50%

19,70%

IPO: none
F-ons: None
M&A: 131

Oct-23-2,90%-3,23%

6,36%. Brazil Basic Interest base rate (SELIC) reduced by 0.5 points to 12.75%
Sep-23

0,71%

5,92%

6,22%

. Brazil Basic Interest base rate (SELIC) reduced by 0.5 points to 13.25%
Aug-23-5,09%

5,68%

IPO: none
F-ons: 3
M&A: 111

5,48%

IPO: none
F-ons: 2
M&A: 135

15
Sources: XP inc./Ibovespa/B3/Kroll Analysis

Ibovespa 2023 Review and Some Key Facts
PeriodMonth

Selected Comments
2022

LTM

jul/23

3,27%

11,34%

11,12%

jun/23

9,00%

14,46%

7,61%

mai/23

3,74%

9,94%

-1,28%

abr/23

2,50%-6,21%-4,83%

mar/23-2,91%-5,56%-7,16%

fev/23-7,49%-12,56%-4,38%

jan/23

3,37%

0,26%

3,37%

dez/22-2,45%

%Var.

4,82

-1,83%

IPO: none
F-ons: 3
M&A: 127. Current inflation and inflationary expectations are subsiding

IPO: none
F-ons: 4
M&A: 934,91-0,61%

IPO: none
F-ons: 1
M&A: 118

4,94-6,62%

IPO: none
F-ons: 3
M&A: 116

5,29

1,34%

IPO: none
F-ons: 1
M&A: 127

5,22

2,15%

5,11-3,77%

5,31

0,19%

5,30

0,38%

. Arcabouço Fiscal improving discussions and submission to Congress are positive news and indicate potential
improvement in the primary results.

. Turbulente beginning of new Lula government - review of some recent reforms and discussions about fiscal
deficit.

IPO: none
F-ons: 0
M&A: 108. President Lula takes office for a 4 years period (his third term)

IPO: none
F-ons: 0
M&A: 99. President Lula wins second round of Brazilian Presidential elections (over President Bolsonaro)
4,69%

BRL to 1 US$. Tax Reform Congress approval (subject to Senate and Presiedent Lula review). Arcabouço Fiscal Senate approval (subject to Congress review and tax rates definition). Agency risk Fitch upgades Brazil to BB and 19 companies (including Petrobras, Sabesp, Cesp, Comgás, MRS
Logística, Energisa Minas Rio, Energisa Paraíba, Energisa Sergipe, Aché, TAG, Rumo, Localiza, Engie Brasil, RedeD’or, Energisa, Taesa, BR Malls and Allupar. +30 companies announced plans to list/ follow-ons for Q3/Q4 and early 2024.
. Brazil Basic Interest base rate (SELIC) expected to be reduced to 13.25% in early August. Data about good performanece of the Agribusiness and Food & Beverages sectors

4,69%# ofFY 2023

IPO: none
F-ons: 0M&A: 15416
Sources: XP inc./ Ibovespa/ B3/ Kroll Analysis

Brazil by the Numbers
2017

2018

2019

2020

2021

2022

2023

2024P

Inflation IPCA (%) Median

2,9%

3,7%

4,3%

4,5%

10,1%

5,8%

4,6%

3,6%

Exchange Rate EOP (BRL/USD)

3,31

3,88

4,03

5,19

5,57

5,28

4,86

4,90

Nominal Interest Rate SELIC (%) EOP

7,00%

6,50%

4,50%

2,00%

9,25%

13,75%

11,75%

9,00%

Nominal GDP (USD bn)

2.063

1.916

1.872

1.475

1.670

1.951

2.172

2.351

Real GDP Growth (% – Market prices)

1,3%

1,8%

1,2%

-3,3%

4,8%

3,0%2,9%1,8%Trade Balance (USD bn)

5647355061629980

Direct Investments (% GDP)

3,3%

4,1%

3,7%

3,0%

2,8%

4,7%

3,2%

3,0%

International Reserves (USD bn)

382

387

367

356

362

325

330

340

Gross Public Debt (% GDP)

73,7%

75,3%

74,4%

86,9%

77,3%

71,7%

74,4%

77,2%

Primary Result (% GDP)

-1,7%

-1,5%

-0,8%

-9,2%

0,7%

1,2%

-2,3%-0,8%

Unemployment – IBGE % EOP

12,5%

12,3%

11,7%

14,8%

11,7%

8,5%

8,0%

8,0%

Definitions:
BRL: Brazilian Real (currency unit)
EOP: End of period
IBGE: Brazilian Institute of Geography and Statistics
IPCA : Brazilian inflation index
SELIC: Sistema Especial de Liquidação e Custódia (Brazilian basic interest rate)(*): Projected
Sources: Itaú BBA Projeção Macro July 2023, XP Investimentos December 2022, IMF, Bloomberg andBacenSelected Kroll Brazil Corporate Finance Transactions

18

For more information, please contact:
Alexandre Pierantoni
Managing Director
Head of LATAM and Brazil Corporate Finance
Sao Paulo+55 11 3192 8103
+55 11 9 5500 8151
alexandre.pierantoni@kroll.com

José Thompson
Director, Corporate Finance
Sao Paulo+55 11 3192 8108
+55 11 9 8689 4026
jose.thompson@kroll.com

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