Bogotá — Colombia saw a total of 61 M&A operations in the first quarter of this year, for a value of $2.09 blilion, with the purchase of the huge Cerrejón coal mine by Glencore being the most relevant transaction.
According to a report by Transactional Track Record (TTR), in the first three months of the year, transactions increased by 17.31%, but their value fell by 2.07%, with the value the lowest for this period since 2020.
Between January and March 2021 there were 52 operations for $2.13 billion, while in the same period of 2020 there were 41 transactions worth $2.23 billion, according to TTR.
However, despite this scenario, venture capital (VC) operations continue to show a strong performance in the country, driven by the activity of the startup space.
In the first quarter of this year, VC funds carried out 28 operations, an increase of 64.71% over the same period last year, for nearly $497 million, an 8.69% increase in value.
Among the subsectors in which VC firms have focused most during the year are banking and investment, internet, software and technology services, and real estate, according to TTR.
Comparing the historical result for the third quarter, the January-March period of 2020 saw the best performance at least since 2019, when just six transactions were closed with a total value of $35 million.
The first quarter of 2021 was the closest to that result, with 17 VC transactions totaling $457 million.
According to TTR’s report, in the first three months of this year, Colombia’s VC landscape ihas been dominated mainly by funds from the United States, Mexico and Brazil.
The most prominent in this period were U.S. funds Tiger Global Management, with VC operations for $201 million, followed by 8VC, with $186.70 million, SoftBank Latin America Fund with $184.50 million, all with two transactions each.
They were followed by Mexican fund Wollef, formerly Jaguar Ventures, which engaged in three transactions for $62.70 million, and U.S. fund Quona Capital, which closed the same number of transactions, worth a total $42.70 million.
Further down the list are the Brazilian fund Canary, with three transactions for $17.20 million, U.S. fund Architect Capital with deals totaling $71 million, and Brazilian fund Monashees with deals totaling US$30 million.
The sum of these transactions exceeds the final amount because two firms may be involved in the same operation, so the aggregate total must be taken into account, according to TTR.
Marcela Chacón Sierra, institutional spokesperson for TTR, said in an interview with Bloomberg Línea that 2022 has seen a larger number of VC operations in year-on-year terms.
“This behavior was due to effects such as market growth, if we talk in comparative terms of the transactional dynamics registered at the beginning of the pandemic. Due to this phenomenon, investors took greater risks in this type of market, and were able to expand their financial muscle in strategic geographies such as Latin America and strategic countries such as Colombia,” she said.
In the case of the VC segment, Chacón Sierra said that a more optimistic dynamic has been seen, due to the growth of ventures and companies at different stages that are easier to promote than private equity projects in which a higher risk is assumed.
“This trend is expected to continue over the course of 2022, and even more so with the uncertain environment that becomes key for investment for those able to take advantage of risk to close deals at a lower value,” she added.