Interviewing our recent Partner from Peru – Misti Capital
We interviewed Rodrigo Mejia from Misti Capital to better understand the Peruvian Market and get an insight into how they work.
They are an independent and leading boutique specializing in financial advisory services. Specifically, they offer strategic corporate finance advice on M&A processes, structured loans, capital markets, and more. Additionally, their expertise extends to investment portfolio management through their multi-family office. their team is led by four partners with a combined experience of over 100 years, holding diverse and recognized positions in the Peruvian market. This strength has provided them with solid relationships across a wide universe of companies and investors.
Market analysis
Peru is an attractive open economy for investors, ranked among the largest countries in Latin America. It has displayed consistent growth over the past decade and remarkable inflation management. While the metal mining sector has been traditionally recognized as one of the main drivers supporting growth, other industrial and manufacturing sectors also contribute significantly to economic sustainability.
Peru maintains investment grade credit rating and adequate credit spreads compared to its peers. Also, in 2023, business perspectives in multiple sectors rebounded to pre-pandemic levels, and domestic demand is expected to drive expansion in both primary and non-primary sectors.
Valuations
Misti Capital deals typically range from US$ 30 million to US$ 250 million, with valuation multiples falling between 6.0x and 12.0x EV/EBITDA, depending on the sector. Sectors such as agriculture, livestock, and fishery usually fall towards the lower range, whereas chemical, healthcare, and other high-end sectors tend to command higher valuations. Even with differences among sectors, valuations have been pretty much consistent over the last years.
Preview of the upcoming year
Overall, we anticipate a favorable outlook for 2024. Sustained growth in the middle-class population, a key driver of local mass consumption, is expected to create opportunities across several sectors. Services, materials, and industrial manufacturing are particularly attractive for M&A, with numerous potential targets for mid-market transactions. However, defensive industries may also present opportunities in 2024, with healthcare and education showing long-term growth prospects that appeal to investors. Together, these industries make up the main watchlist for us.
Co-operation
Joining M&A Worldwide marks a significant milestone for our growth. We firmly believe that this collaboration will enable us to expand our international reach, strengthen relationships with a relevant group of professionals, share our comprehensive approach and knowledge of the Peruvian market, and ultimately provide the best service for our clients. We have already engaged with Latin American partners to explore cross-border opportunities and identify cooperative roads in multiple potential transactions.
Recent transactions?
In our latest M&A transaction, we acted as the exclusive financial advisor to the shareholders of Chema, a family-owned business and leading mortar manufacturer, in the sale of 100% of its shares to the Swiss company Sika. This transaction represented a historic investment in the construction materials sector and reflects the attractiveness of Peru for foreign investors. Although the transaction is still subject to merger control authorization from regulatory entities, we anticipate a smooth closure during 1Q24.
Regarding debt refinancing, we have recently concluded deals in the services (Soluciones Estructurales), agriculture (Del Ande Alimentos), and retail (Michelle Belau) sectors. We also maintain a robust ongoing pipeline for M&A transactions, primarily focused on the industrial and chemical sectors.