UPDATE: 4/25/13, 12:50 p.m. EST. The names of the Sullivan & Cromwell lawyers advising BBVA have been added to the 18th paragraph of this story.
From the Darien Gap in Colombia to the Cape Horn of Chile, Latin American economies are entering an age of stability and growth, with private equity and venture capital firms expanding their investments in the region, according to a recent report by The New York Times.
All of this is good news for Am Law 100 and large regional firms looking to expand their own horizons. This week Covington & Burling, Sullivan & Cromwell, and a handful of firms from Brazil and Peru snagged roles on two notable deals.
The first of those transactions was the $2.5 billion all-stock merger between Brazil’s Kroton Educacional and Anhanguera Educacional Participacoes—a deal that Bloomberg reports will create the world’s largest for-profit education company.
Boston-based private equity firm Advent International owns Kroton, which turned to leading Brazilian firm Barbosa, Mussnich & Aragao for counsel on the transaction. Leading a team from the firm on the matter are name partner Paulo Cezar Aragao, partner Roberto Dias Carneiro, and associate Leonardo Diogo Batista.
Leonardo Augusto Leao Lara serves as Kroton’s general counsel. James Westra, the former cohead of the private equity practice and managing partner of the Boston office for Weil, Gotshal & Manges, was hired by Advent in 2011 to become its chief legal officer and managing director.
Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga, a top legal adviser for M&A in Brazil, has taken the lead for São Paulo–based Anhanguera on the proposed transaction. Corporate rainmaker Sergio Spinelli Silva Jr., who spoke with The American Lawyer last year about his firm’s effort to reinvent itself in a new global age, is leading a team advising Anhanguera that includes partner Hiram Bandeira Pagano Filho and associate Carolina Simoes Cardoso.
Anhanguera, the largest for-profit educational company in Brazil, is controlled by Patria Investimentos, one of the country’s top private equity firms. Luiz Otavio Reis de Magalhaes, a former lawyer at another leading Brazilian firm called Pinheiro Neto, is Patria’s founding and managing partner.
Patria’s former general counsel, Marco Pisani, left the private equity firm last year to become a founding partner of the São Paulo–based fund administration provider Lions Trust. Anhanguera’s chief legal officer is Khalil Kaddissi.
Reuters reported in March that Brazil’s leftist President Dilma Rousseff, a Marxist guerrilla during the 1970s, has worked hard over the past two years to win over skeptical capitalists. The country has gradually become more hospitable to foreign investors, while also drawing more interest from Am Law 200 firms, according to a 2010 feature story in The American Lawyer‘s Global 100 issue.
Several notable deals with Brazilian ties have already been announced this year, one of which saw Sullivan & Cromwell advise London-based mining giant Anglo American in January on the sale of its 70 percent stake in Brazilian iron ore operation Amapa to Brazil’s Zamin Ferrous for an undisclosed sum.
February saw Kirkland & Ellis get the call to advise New York–based, but Brazilian-backed private equity firm 3G Capital on its joint $28 billion bid with Warren Buffett’s Berkshire Hathaway to buy H.J. Heinz, according to our previous reports. ( Bradley Brown serves as 3G’s chief compliance officer and general counsel.)
Davis Polk & Wardwell also counseled CVS Caremark on its first-ever international deal in February—its purchase of Drogaria Onofre, Brazil’s eighth-largest drugstore chain, the terms of which were not disclosed. Jones Day and Mattos Filho advised Houston-based Group 1 Automotive on its $146 million cash-and-stock acquisition in March of UAB Motors Participacoes, one of Brazil’s largest car retailers, according to the Latin Lawyer.
Those deals—as well as such potential transactions as Brazilian billionaire Eike Batista’s possible sale of his natural gas and electricity company MPX and the private equity purchase of Brazilian infrastructure services provider Mills Estructuras e Servicos de Engenharia—have enticed some Am Law 200 firms to ramp up their Brazilian expertise.
The Am Law Daily reported in March on Haynes and Boone’s cooperation agreement with Rio de Janeiro’s MMA Lawyers and the previous month on Fragomen, Del Rey, Bernsen & Loewy’s opening of outposts in Belo Horizonte, Rio de Janeiro, and São Paulo. With an eye on a possible Rio opening of its own, Baker Botts picked up former DLA Piper energy partners Carlos Sole and Jeremy Kennedy last month in Houston, according to sibling publication Texas Lawyer. New York’s Maalouf Ashford & Talbot also inked a cooperation agreement in February with São Paulo corporate finance lawyer Alexandre Lopes.
Of course, Brazil isn’t the only Latin American market with growth potential. A world economic outlook report released this month by the International Monetary Fund also cited positive indicators for the economies of Chile, Panama, and Peru.
This week Spanish banking giant BBVA announced that it is exiting its investment in Peruvian pension fund AFP Horizonte by selling its stake to two separate pension firms controlled by units of Colombia’s Grupo de Inversiones Suraamericana (Grupo Sura) and Canada’s Bank of Nova Scotia (Scotiabank).
The Financial Times reports that the $516 million deal will see Grupo Sura and Scotiabank each own 50 percent of AFP Horizonte, which has about $9 billion in assets under management. It’s the latest asset sale by Bilbao-based BBVA, which in February agreed to sell its Chilean pension fund provider AFP Provida to MetLife in a roughly $2 billion deal that yielded roles for Skadden, Arps, Slate, Meagher & Flom and S&C, according to our previous reports.
As it happens, S&C’s Paris office managing partner and financial institutions expert William Torchiana, Latin American practice head Sergio Galvis, and European M&A counsel Joram Lietaert Peerbolte are leading a team from the firm representing BBVA on the deal, along with banking and finance partner Luis Enrique Palacios of Peru’s Rodrigo, Elias & Medrano. Other S&C lawyers working on the matter include tax partner Ronald Creamer Jr., IP partner Nader Mousavi, special IP counsel Blaze Waleski, special employee benefits counsel Rebecca Coccaro, and associates Kathryn Freund, Kiran Kadekar, Robin Kelly, Eugenio Labadie, Allison MacDonald, Christopher Payne, and Jorge Solis.
Ian Arellano, cohead of the international practice at Canadian firm Torys, and corporate partner Felipe Boisset of Peru’s Rebaza, Alcazar & De Las Casas are advising Toronto-based Scotiabank on the transaction, which requires the approval of Peru’s pension regulator. Deborah Alexander serves as general counsel for Scotiabank, which turned to Torys last year for counsel on its $3.1 billion acquisition of the Canadian banking unit of Dutch financial services giant ING Groep, which was advised by S&C on that transaction.
Medellin-based Grupo Sura has turned to a team of lawyers led by Covington of counsel Gabriel Mesa, corporate partner Ruben Kraiem, tax partner Robert Heller, IT and technology partner Lee Tiedrich, associates Jessica Milner and Cecile Zwiebach, and partner Luis Marcelo de Bernardis and counsel Anahi Com Arguelles of Lima’s Miranda & Amado for counsel on its purchase of a stake in AFP Horizonte.
Grupo Sura tapped Shearman & Sterling two years ago in connection with the company’s $3.9 billion purchase of the Latin American insurance division of ING, which used S&C as outside counsel for that deal.