Brazil & Southern Cone - June 2015 (ISSN 1741-4431)

FDI: In late May the United Nations (UN) Economic Commission for Latin America & the Caribbean (Eclac) released its annual report on foreign direct investment (FDI) in the region. According to the report, inflows to Chile were up 14% in 2014 to US$22.0bn, despite falling investment in the crucial mining sector (see sidebar). Eclac noted the acquisition by Spain’s Gas Natural Fenosa of Chile’s Compañía General de Electricidad for a total of US$3.3bn, making the Spanish company the largest player in the Chilean electricity market, with a 40% market share. Other noteworthy investments included: Abbott Laboratories (US), which announced a US$2.9bn takeover of CFR Pharmaceuticals, a Chilean pharmaceuticals company with assets in several Latin American countries. Brazil’s Itaú Unibanco acquired a controlling stake in Corpbanca for an estimated US$2.85bn, although the deal is still subject to regulatory approval. Alliance Boots, which is controlled by Walgreens and KKR (both of the US), acquired Farmacias Ahumada, which operates in both Chile and Mexico, for US$740m. Finally the acquisition of Bupa Chile by the British United Provident Association was valued at approximately US$497m.

The electricity sector received several other large investments in 2014 – particularly in renewable energy. According to the Eclac report, some 982 megawatts (MW) of renewable energy projects came online in 2014, compared with 244MW in 2013, resulting in a total of 2,097MW of installed capacity. While wind energy accounts for the largest share of installed capacity with 836MW, solar power is the fastest-growing area, surging from 4MW at the end of 2013 to 402MW at the end of 2014. The foreign investments announced in this sector in 2013 included a US$1.4bn investment in wind and solar by Ireland’s Mainstream Renewable Power and a US$1.2bn investment in hydropower by US-based AES Corporation. In 2014 Spain’s Abengoa announced a US$750m investment in solar energy.