Brazil Transactions Insights - 2021 Year in Review

Despite the adverse effects of the COVID-19 pandemic and a level of uncertainty in the political arena, Brazil has witnessed a record-high volume of both Initial Public Offerings (IPOs) and Mergers and Acquisitions (M&A) activity in 2021, encompassing all sectors of the local economy. 

M&A activity continues to be driven by both domestic and foreign investors (strategic and financial ones), with a strong highlight on recent investments by venture capital funds.

With a Gross Domestic Product (GDP) growth of 4.5% in 2021 and an expected marginal growth for 2022, the macroeconomic outlook is hardly positive, especially considering the upcoming presidential elections. However, increasing internal demand, a strong government emergency aid program and favorable global cycle for commodities’ prices will continue to provide tailwinds for economic growth. 

The Brazilian federal government remains committed to a series of important structural reforms, including simplification of the complex domestic tax environment* and administrative reform, aimed to reduce public spending. The privatization program remains one of the main priorities in the government’s agenda for the coming months, pointing to relevant opportunities for long-term investments in infrastructure and the foundation of the country’s sustained growth.

* On January 25 Brazil was formally invited to join Organization for Economic Co operation and Development (EOECD).