Favo, social commerce platform, raises $26.5 million series A

Favo, the social commerce platform currently operating in Brazil and Peru, announced a $26.5 million in Series A funding to continue developing its app that takes grocery orders through local social networks.

Tiger Global Management led the round, with existing investors GFC, Elevar Equity, Kevin Efrusy, David Velez, FJ Labs and H2O participating. The latest round gives the company about $37 million in total funding since the company was started in 2019 by Alejandro Ponce and Marina Proença.

Families in Brazil spend, on average, $118 a month on food. According to IBGE data, they spend up to 22% of their budget on groceries. Favo enables under-employed entrepreneurs to create new income streams through steady sales commissions from their own local network. People order groceries through the Favo app, and the logistics system fills the order and arranges delivery, in bulk, to the entrepreneur the next day. The entrepreneur completes the last-mile delivery.

By having entrepreneurs be the contacts for the shoppers Favo is removing the lack of trust for buying groceries online, which included the fear of not receiving their goods because they didn’t have a human to talk to.

Favo launched in Peru in 2020 and then Brazil. The co-founders plan to focus the new funding on logistics and fulfillment operations, as well as expansion in Brazil and into Mexico. Ponce expects to be in 20 cities in the following months.

The company is working with 160,000 buyers and seeing revenue increase 30% month over month. Buyers can choose from over 3,000 products that are delivered to them within 24 hours.

Source: Statista, Insider Intelligence, eMarketer, Smart Insights

Latin American M&A booms to 10-year high of $105 bln

 Mergers and acquisitions in Latin America hit $105 billion in the first nine months of the year, the highest volume in a decade, according to Refinitiv data, as large amounts of fresh capital fueled a deal frenzy in the region. “Proceeds of IPOs and share offerings have financed acquisitions in a range of industries, such as healthcare, oil and gas, power, fintechs and retail”, said Ricardo Bellissi, co-head of investment banking at Goldman Sachs in Brazil.

Even with Latin American equity markets hit by volatility, higher inflation and interest rates, especially in Brazil, where there is also a presidential election next year, most bankers do not expect a drop in near-term M&A.

After raising $25 billion in equity offerings this year and almost $30 billion last year, Latin American companies have strong cash positions to finance M&A.

“Even with higher inflation, interest rates rising and an election in Brazil next year, the deal flow is expected to remain strong”, said Bruno Amaral, head of M&A at Banco BTG Pactual, Latin America’s leader in Refinitiv M&A ranking through September.

Amaral is also optimistic about potential deals in Chile, one of the Latin American countries that best handled the pandemic, and Peru and Colombia, which like Chile are benefitting from high commodity prices.

Source: Refinitiv

The largest deal of the region so far is the proposed $9.5 billion takeover of NotreDame Intermedica by rival Hapvida SA, still under analysis of Brazilian antitrust watchdog CADE.

Other top deals included Univision’s acquisition of Grupo Televisa’s assets and the spin off of Brazilian retailer GPA SA’s wholesale division Asai, with values close to $5 billion each.

Among the most active industries are healthcare, still very fragmented in the region, and fintechs, attracting a lot of investor interest as they grab a piece of a market long dominated by brick and mortar banks.

Privatization and infrastructure deals are contributing to higher deal values. The auction of state-owned water and sewer operations in Rio de Janeiro raised 22.6 billion reais and the sale of operator Oi’s fiber and mobile units, almost 30 billion reais. In another upcoming transaction, America Movil is slated to spin off its Latin America tower business by year-end.

Sales of refineries by state-controlled oil company Petrobras and fiber units by Copel, Telefonica and TIM in Brazil are expected for the next months.

Cross border activity also picked up. “Brazilian companies are back to acquisitions abroad,” said Luiz Muniz, partner and head of Latin America at Rothschild & Co, citing JBS unit Pilgrim’s Pride Corp’s 819 million-euro acquisition of Kerry Group Plc’s British and Irish consumer foods units, among others.

SPACs, dealing with high target prices in North America are also focusing in the region, but have yet to announce a large deal.

Financial advisory is very active in Latin America, with 77% of deals above $100 million using financial advisors. (Reuters)

Where is my whatsapp?!?!? Facebook outage rocks Latin America

While many people around the world coped with the Facebook and Instagram outage by making lighthearted jokes on Twitter, the incident had more serious consequences for WhatsApp users in Latin America.

Facebook, WhatsApp and Instagram are now back online after millions were unable to access the social media sites or messaging app for several hours on Monday. The company said the issue was down to a faulty configuration change.

While the social media giant and the apps it owns were suffering issues, people on Twitter—which worked fine throughout Monday’s outage—noted that WhatsApp not working would overwhelmingly affect people in Latin American countries where it is used by a majority of the population.

According to Global Web Index’s 2020 Social Media User Trends Report, 93 percent of those aged 16-64 in Argentina use WhatsApp, as well as 92 percent of Colombians in the same age group, and 91 percent of people in Brazil.

Source: Statista 2021

WhatsApp has become popular in Latin American countries as it offers free Wi-Fi messaging to others on the app. As noted by eMarketer, because of a lack of competition, mobile phone tariffs in Latin America are some of the highest in the world.

The app has also become an invaluable tool for those wanting a free and easy way to keep in contact with relatives who have moved to the U.S. WhatsApp is also more likely to be used by people of all ages compared to other messaging services or apps.

By 2023, more than 94 percent of Hispanic smartphone users in the U.S. will have WhatsApp installed, eMarketer predicts. In comparison, there were a reported 68.1 million WhatsApp users in the U.S. in 2019—roughly 20 percent of the entire population. (Newsweek)

Latin America sovereign recovery picks up pace in 2021

Fitch Ratings has revised 2021 growth forecasts upwards for much of Latin America in its latest Sovereign Data Comparator. Post-lockdown normalization of economic activity, quicker pace of vaccine rollouts, high commodity prices and base effects have supported higher growth. High workers’ remittances and a rebound of tourism in some countries is helping too. Regional growth is forecast to reach 6.4% in 2021 (previously 5.7%). However, the speed of recoveries varies, influenced by the size of last year’s contractions, ongoing fiscal stimulus and country-specific factors. Regional growth will decelerate to 2.5% in 2022 due to slower global (and China) growth, potential tightening of external financing conditions and gradual withdrawal of domestic fiscal and monetary stimuli.

Different Recovery Speeds: Panama and Peru are forecast to have the strongest recoveries in 2021, although in part due to base effects after the region’s steepest contractions last year. Chile’s high expected growth is supported by one of the quickest vaccine rollouts and high copper prices, as well as continuing large fiscal stimulus and three pension withdrawals supporting consumption. Colombia, despite a 2Q21 GDP contraction due to social unrest and loss of investment-grade status in July, is also forecast to see strong growth in 2021, as well as the Dominican Republic.Low MT Growth Prospects: Despite a rebound this year, medium-term (MT) growth prospects are weak relative to other regions. Low investment rates, lack of progress on structural reform agendas, competitiveness issues and political unrest pose challenges. (Fitch)

Source: Oxford Economics, Atradius

Brazil’s Central Bank Mobile Payment System With 110 Million Users

Pix, a system which allows fast money transfers over smartphones, has become ubiquitous in the 11 months since it was launched by Brazil’s central bank. All that’s needed to send cash to someone is a simple key they’ve set up, such as an email address or phone number. Similar to the privately owned Zelle in the U.S., Pix works through multiple apps from banks and other digital wallet services. It’s already been used at least once by 110 million Brazilians and about $89 billion has moved through the network. Brazil now registers more instant transfers than the U.S.

The launch of Pix turned out to be well-timed. With businesses closed during the pandemic, the use of cash at points of sale decreased by 25% in 2020, according to a report from technology consultant FIS. Informal work boomed, accounting for 80% of the new jobs added in Latin America’s largest economy in the first three months of 2021. Pix made paying people digitally almost as easy as using paper money. “We expected considerable acceptance from individuals, and we knew companies would come later on,” says Carlos Eduardo Brandt, the chief of management and operations for Pix. “But in terms of magnitude, it surprised us.”

In July, Pix broke its own record of 40 million payments in one day. Most of those were person-to-person One of the goals of the Central Bank of Brazil in launching Pix is to get more people inside the formal financial system. (Bloomberg BusinessWeeK)

 

Source: ACI Worldwide

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