Tech-driven VC stealing the show in Mexican M&A

Venture capital deals in Mexico’s burgeoning tech sector have stolen the spotlight among M&A activity in 2021, producing some of this year’s most hyped transactions in the region, and research firm Transactional Track Record (TTR) sees the trend holding strong.

In the third quarter, Mexico saw digital pre-owned car marketplace Kavak grab an additional US$700mn VC injection, brand aggregator Merama pick up US$225mn and online lender Konfio receive US$110mn.

Mexico saw a total of 37 VC deals in the third quarter (+8.82% compared to 3Q20) with combined capital of US$1.7bn (+198% over 3Q20).

“International strategic players continue to have a strong appetite in sectors related to technology, especially e-commerce – in the retail sector – and in fintech, particularly US [buyers] that are increasing their investments in LatAm, in addition to certain leading financial firms,” Marcela Chacón, TTR research and business intelligence analyst for Latin America, told BNamericas.

Chacón added that these tech trends are bubbling up across Latin America, not just Mexico.

The TTR analyst said the potential for fintechs is clear with plenty of room to grow, given the segment only represents 5% of financing in the region, “which means there’s a huge opportunity for future cross-border transactions.”

TTR reports Mexico registering 112 VC deals from January to September with a disclosed value of US$3.71bn. This represents a 47% increase in the number of operations and 297% in value, compared to the same period 2020. 

Tech-driven VC and other deals were one of the few areas in M&As to fare decently in pandemic-stricken 2020. 

The following TTR graphic details venture capital deals in Mexico over the first nine months of 2021 by sector in comparison to the same period last year. 

Source: TTR 

TTR also tracked the most active venture capital firms in Mexico from January to September: 

Source: TTR 

PRIVATE EQUITY AND ASSET ACQUISITIONS

TTR also recorded 14 private equity transactions in Mexico from January to September for a combined value of US$696mn, a 17% year-on-year increase in number of deals and a 187% jump in private equity capital mobilized. 

In the asset acquisition market, TTR reported 38 transactions in Mexico for the same period with US$5.75bn through September. This reflects a 12% drop in the number of deals, but a 465% boom in deal value, compared to January to September 2020.

BROAD ACTIVITY

Mexico saw a total of 261 transactions – including M&A, private equity, venture capital and asset acquisition – over the first nine months of 2021, according to TTR, amounting to US$15.2bn in combined disclosed deal value. 

This reflects a 21% annual jump in the number of operations and a 36% increase in disclosed deal value compared to the same period 2020.

In Q3, 90 operations were recorded with an aggregate amount of US$3.89bn.