11 November 2013 | By Burhan Khadbai
15 January 2014
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Despite public discontent Brazil is showing it is rich in opportunity, spurred on by its hosting of the FIFA World Cup and the Rio Olympics
Brazil has taken its place at the centre of the world stage, being one of the leading emerging economies. As the country heads into next summer, when it will host the 2014 FIFA World Cup for the first time in 63 years, there are plenty of opportunities on offer that are attracting both local and foreign investment. And further ahead, preparations are already in full swing for the 2016 Rio Olympics.
M&A is a strong and growing area of practice where there has been a surge in the volume of deals in the past six months.
“Although capital markets work hasn’t been as good as previous years in either equity or debt, we’re seeing some good-sized M&A deals in the market,” says BM&A partner Rafael D’Avila Dutra.
It has been a good year for BM&A, with the firm having advised on the two largest M&A deals in Brazil in the past 12 months, including the BRL6bn (£1.7bn) merger between education giants Kroton and Anhanguera. The deal, completed in April, has created the fourth largest educational group in the world.
However, the top M&A deal was JBS’s $2.7bn (£1.7bn) acquisition of the Brazilian poultry unit of Marfrig Alimentos subsidiary Seara Foods in June. JBS, already the world’s largest producer of beef, looks set to become the world’s largest producer of poultry too, following the deal.
The firm has also been busy advising on a major cross-border transaction in the acquisition of Portugal Telecom by Oi, one of the largest telecoms companies in Brazil.
Meanwhile, infrastructure is continuing to provide work and attract foreign investment, thanks to the government’s $100bn plan to improve roads and railways.
A key part of this plan is a BRL35.5bn high-speed rail project (Trem de Alta Velocidade) connecting the cities of Sao Paulo, Campinas and Rio de Janeiro, with trains covering the 300-mile route at speeds of up to 217 miles per hour.
Bidding for the project was expected to start this year but has now been postponed until 2014 by Brazil’s transport minister Cesar Borges due to a lack of competition to lead the project. The railway is due to open in 2020.
One of the firms involved in the project is Dias Carneiro Advogados, a relatively small outfit in Brazilian terms, with 62 fee earners and eight partners. But the firm has hopes of expanding in the new year.
“We’re assessing the synergies that could result from the incorporation of a reputable boutique at the beginning of next year, which could help us expand into different areas of practice and consolidate ourselves as a full-service law firm,” says Dias Carneiro managing partner Thiago Vallandro Flores.
Dias Carnerio, which specialises in cross-border transactions, capital markets and finance, hopes to add consumer relations and litigation to its work through the merger.
Another piece of work the firm has undertaken recently involves advising Falcon (BC) Germany Holding 3 on the Brazilian aspects of the €320.7m (£271m) acquisition of German automotive group FTE Verwaltungs from funds managed by PAI Partners and managers of the company.
The dark side
While there is clearly a lot to cheer about in Brazil, there is a flipside. There is a strong feeling among Brazilians that public money is being misused by the government.
A national movement of protest kicked off during the Confederations Cup in June and has continued since. Lawyers say the protests started over increases in public transport prices, but broadened to include grievances over more gen-eric issues such as corruption.
A substantial proportion of the public feels that the billions of taxpayers’ money being spent on projects such as the high-speed railway, the World Cup and the Olympics should instead be going to improve services in areas such as education and health.
The government has acted rapidly to address some of these concerns by introducing new laws, including one intended to combat corruption that will come into force next year. This, coupled with general work levels, means Brazilian lawyers are optimistic.
“Confidence in Brazil is increasing – we’re going to have an interesting 12 months, during which we expect much more growth,” concludes Dutra.
Key figures: Brazil
Life expectancy at birth: 73
Unemployment rate: 5.4%
Source: World Bank, Instituto Brasileiro de Geografia e Estatística