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Private Equity

COVID-19 Chronicles Revisited: Latin America

Cross border M&A in the time of COVID-19

In late 2020, Actis closed one of the largest M&A transactions in its history: we sold one of the leading renewable platforms in Latin America for an enterprise value well over one billion dollars. This was the culmination of a long journey of value creation for Actis, and it came with a wrinkle: we never got to meet the buyer.

The buyer was a strategic Asian investor with whom we started a dialogue in late 2019. By the time we engaged in earnest to discuss the transaction and establish a process in early 2020, a good part of East Asia was well into lockdown.

In the Americas, COVID-19 sounded foreign and distant – reminiscent of SARS in 2002 that never made it into the western hemisphere or the H1N1 virus in 2009 that eventually proved to be less threatening than originally feared.

We watched our Asian counterparts with curiosity, wearing face masks over video conference calls, due to travel restrictions. The Actis Latin America team made its way from Mexico City to Colombia to celebrate a colleague’s wedding in late February 2020, little did we know this was the last trip many of us would make for over a year.

By the middle of March 2020, the virus had raged like wildfire throughout the world, and made its way into Latin America. This resulted in travel restrictions and lockdowns. The buyer resourcefully worked through the due diligence phase remotely.

With due diligence wrapped up, we were ready to negotiate the transaction documents. Normally, the buyers and sellers would meet face to face in New York or London in an elegant lawyer’s conference room and iron out the deal through sometimes long and intense negotiation sessions.

Given the circumstances, we had to settle for virtual meetings in our bedrooms or dining rooms with children in the background. With lawyers and bankers joining from New York, London, Singapore, Hong Kong and Mexico City, finding a suitable time was hard… and more often than not, either our counterparty or us had to settle for an unsuitable time.

The hardest challenge to overcome was how to establish a personal connection with a group of people that we had never met in person. Small talk over a Zoom meeting or cracking a joke to find people not coming off mute will get awkward… fast. The key was to (over) communicate, prioritise transparency and be willing to compromise.

By the summer of 2020 we agreed a deal – it provided the buyer with a strategic footprint in one of the largest power markets in Latin America while resulting in a fantastic financial outcome to Actis. Not bad for a few (ok, many) days of work from home.

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