Uruguay is an attractive destination for M&A activity

Uruguay stands out as a stable player in the mergers and acquisitions (M&A) scenario in Latin America, according to the latest report presented by Uruguay XXI in collaboration with Uruguay Innovation Hub and the Uruguayan Private Equity Association (Urucap). The event, which took place at the Innovation Campus of the LATU technology park, brought together leading sector representatives to discuss the opportunities and challenges of the Uruguayan investment ecosystem.

2023 was a complex year for M&A activity globally and regionally, with a decrease in invested capital and the number of deals due to the economic slowdown, high inflation, and high interest rates, explained the report presented by the Competitive Intelligence Manager of Uruguay XXI, Mariana Ferreira, and the Investment Projects Manager of the same agency, Alvaro Brunini.

Despite these difficulties, Uruguay maintained a stable performance, with 20 M&A transactions, a figure similar to the previous year’s. Of these, 16 were in the trade and services sector, which includes global services, fintech, technology, and trading companies.

“We already have data for some months of 2024, and we see that the trend of investment and acquisition in technology companies continues. We also see the development of the Lab+ accelerator fund as a novelty, which was born from the partnership between Ficus Capital and the Pasteur Institute, which will energize investment in biotech startups. We are seeing an exciting trend in this sector, with an important development of ventures and companies attracting special attention from investment funds,” said Brunini.

Uruguay grew in strategic sectors

The technology and mass consumption sectors have shown remarkable dynamism in recent years and are expected to continue to be growth drivers in 2024. Technology was one area in which these acquisitions were concentrated, with companies in the fintech sector attracting significant investments. For example, Bankingly and Prometeo were able to raise international financing, consolidating Uruguay as a technology hub in the region.

The report highlights that the leading investors in the Uruguayan market come from the United States, Mexico, Brazil, and Argentina. These countries grew interested in global services, fintech, and agribusiness sectors. U.S. companies, in particular, led acquisitions in global services and information technology, while Argentine and Brazilian investors focused on manufacturing and agribusiness.

“These data align with the origin of foreign companies investing in Uruguay in all investment modalities,” Ferreira compared.

The report also highlights the evolution of the country’s investment funds and M&A ecosystem. During the last decade, 176 transactions were registered, predominantly deals in manufacturing and global services. M&A was mainly driven by foreign companies, reflecting Uruguay’s attractiveness as an investment destination.

In addition, Uruguay’s innovation and private equity ecosystem is experiencing significant growth, with an increased interest in startups. Uruguayan Private Equity Association (URUCAP), created in 2022, was an important step in consolidating this ecosystem, promoting networking events and activities that facilitate collaboration and knowledge sharing.

In this context, Uruguay XXI presented its Investment Project Portfolio last year, an online portfolio in which opportunities are offered to registered investors.

Stability, security, and incentives ensure the outlook for 2024

During the event, a panel composed of Sabrina Sauksteliskis, executive director of Uruguay Innovation Hub; Sylvia Chebi, president of Urucap; Carolina Gutiérrez, Latin America leader at Vesta Software; and Tomás Peña, Managing Director for Argentina at The Yield Lab Latam, discussed the outlook for private equity and M&A in Uruguay. An increase in the number of transactions is projected for 2024, focusing on technology and mass consumption, sectors that have demonstrated resilience and growth potential.

Uruguay’s economic, political, and social stability, legal certainty, and tax incentives continue to be critical factors that attract foreign investors. According to a recent survey, 84% of foreign investors are satisfied or very satisfied with the business climate in the country, and foreign exchange freedom and the ease of repatriating dividends are crucial elements.

Read the full report here.