Foreign Direct Investment in Latin America and the Caribbean 2017

42 Chapter I Economic Commission for Latin America and the Caribbean (ECLAC)
United States firms concluded a number of large transactions in 2016, including
the acquisition of Freeport-McMoRan oil assets in the Gulf of Mexico by Anadarko
Petroleum Corp. for US$ 2 billion and the purchase of Duke Energy’s Latin American
portfolio by I Squared Capital Advisors for US$ 1.2 billion. United States and European
firms were also eager to acquire road concessions or toll road operations, as evidenced
by the acquisition of the Línea Amarilla highway in Peru by French group Vinci S.A. for
US$ 1.66 billion, the purchase of Serviços e Tecnologia de Pagamentos S.A., Brazil’s
largest electronic toll payments firm, by United States group FleetCor Technologies
Inc for US$ 1.089 billion, and Spanish company Abertis’ buyout of the concession of
Chile’s Autopista Central for US$ 1.028 billion.
The largest transaction of the year was made by the Canadian firm Brookfield
Renewable Partners, which purchased Colombian hydroelectric company ISAGEN for
US$ 3.5 million, including the Colombian Government’s 57.6% interest in that company.
Canada was on par with the United States in terms of the number of transactions;
however, as these primarily involved small mining deals, Canada had only one of the
20 largest transactions.
Conversely, Chinese firms carried out 3 of the largest 20 transactions, with the
highest value purchases concentrated in the energy and mining sectors in Brazil. China
Molybdenum Co. acquired the niobium and phosphates businesses of the British
company, Anglo American, for US$ 1.5 billion and China Three Gorges Corporation bought
the hydropower plants of the American firm Duke Energy Corp for US$ 1.2 billion. The
US$ 450 million acquisition by Hainan Airlines Co. Ltd. of a 23.7% stake in Brazilian
airline, Azul S.A., signalled a novel diversification of China’s investment profile. China
has thus cemented its role as a leading investor in Latin America and the Caribbean
in recent years, and while it is only just beginning to participate in sectors other than
extractive industries, the aforementioned transactions could point to a widening of the
sectoral profile of Chinese capital in the region, as has been the case in Europe and
the United States in the last two years (see section B of this chapter).
Two of the 20 largest transactions of 2016 were carried out by trans-Latin firms;
both the Mexican Coca-Cola franchise and the Colombian company Sura extended
their reach in the regional market (see section D). The sale of the Mexico-based
pharmaceutical company, Representaciones e Investigaciones Médicas S.A., to the
Israeli multinational Teva Pharmaceutical Industries was the second largest transaction
of the year. However, a legal battle ensued between buyer and seller, leading to the
shutdown of the manufacturing plant. 9 Unlike in previous years, there were few major
telecoms transactions, with only one among the 20 largest.
One of the largest divestment operations of 2016 occurred in the financial sector. The
British bank, HSBC Holdings, sold all of its Brazilian operations to Banco Bradesco S.A. for
US$ 5.186 billion, in line with its strategy of retreating from emerging markets (see table I.6).
The divestment strategy undertaken by Petrobras was reflected in the sale of
assets in Brazil and abroad. In particular, a 67.19% stake of Petrobras Argentina S.A.
was sold to Argentine company Pampa Energía S.A. for US$ 892 million. While the
energy sector has received major investments from transnational corporations, local
firms have also been making acquisitions. For example, the Brazilian company CPFL
Energia purchased Distribuidora Gaúcha de Energia S.A. from United States-based AES
Corporation for US$ 464 million, and the Argentine group Desarrolladora Energética
S.A. expanded its presence in the province of Buenos Aires by acquiring control of
the concessions granted to Empresa Distribuidora de Energía Norte S.A. and Empresa
Distribuidora de Energía Sur S.A.
9
At the time of writing, it was not known whether the dispute had been resolved, although there were suggestions in April 2017
that the company might resume operations within a few months (see Reuters, 2017).