The first half of 2022 was extremely challenging, with the Brazilian economy seeking out a resumption of growth. The consequences of the pandemic were made worse by Russia’s war on Ukraine. Adding to this, the rise of political uncertainty due to the presidential election in October, which seems to be contested by the conservative party and the left party candidates (Jair Bolsonaro vs. Luiz Inacio Lula da Silva), may affect more the economy.

As a consequence, we have seen an increase in inflation and the basic interest rate, slowing the capital market activities and leading investors to allocate capital in fixed income assets. In the first half of 2022 there were no IPOs and only 11 follow-ons have been carried out during the same period in 2021 (28 IPOs and 16 follow-ons were caried at the same period in 2021).

Brazil Transactions Insights Summer 2022

M&A activity is slowing down. The numbers of transactions is slightly lower than the same period in 2021; this is also a reflection of the instability and inability to correctly assess risk, affecting investor’s mood. 

With a GDP growth of 1.7% in Q2 2022, the macroeconomic outlook is hardly positive, especially considering the upcoming presidential elections. In the last 12 months, Inflation (IPCA) closed at 11.89% mainly due to the price of oil, corn and wheat, caused by the Russian-Ukrainian conflict. However, unemployment rate has decreased to the lowest level since 2016, reaching 9.8% (10.6 millions). 

In an attempt to contain inflation, which has increased, the basic interest rate (SELIC) started the year at 9.25% and ended the first half of 2022 at 13.25%. The expectations are to end the year at 13.75% and decrease along the inflation in 2023.

Mergers and Acquisitions (M&A) Advisory

Kroll’s investment banking practice has extensive experience in M&A deal strategy and structuring, capital raising, transaction advisory services and financial sponsor coverage.

Transaction Advisory Services

Kroll’s Transaction Advisory Services platform offers corporate and financial investors with deep accounting and technical expertise, commercial knowledge, industry insight and seamless analytical services throughout the deal continuum.

Valuation Advisory Services

Our valuation experts provide valuation services for financial reporting, tax, investment and risk management purposes.

Fairness and Solvency Opinions

Duff & Phelps Opinions is a global leader in Fairness Opinions and Special Committee Advisory, ranking #1 for total number of fairness opinions in the U.S., EMEA (Europe, the Middle East and Africa), Australia and Globally in 2023 according to LSEG (FKA Refinitiv).

Private Capital Markets – Debt Advisory

Kroll has extensive experience raising capital for middle-market companies to support a wide range of transactions.