Latin America Venture flows continue crushing records
LAVCA estimates at least $6.2 billion in VC investments for 1H 2021 far surpassing 2019’s full year record of $4.6 billion.
Source: LAVCA data
SoftBank doubles down on LATAM Venture
Softbank announced plans to invest an additional $5 billion in Latin American companies doubling its commitment to the region to $10 billion. Bloomberg also reported SoftBank will expand the scope of its investments in the region to span from seed and Series-A startup rounds to taking stakes in public companies. The additional infusion may be used to create a SoftBank Latin America Fund 2 or to extend the existing one, launched in 2019, according to the people. SoftBank’s Chief Operating Officer Marcelo Claure will continue to lead the effort.
SoftBank founder Masayoshi Son is stepping up his investments in technology companies after a number of high-profile debuts in recent months including Coupang Inc. and DoorDash Inc. helped push the company’s profit to an all-time high last fiscal year. Son also doubled the pot for Vision Fund 2, where the company is a sole investor, to $40 billion since the end of March. SoftBank’s portfolio across three different funds totals over 220 companies.
The Japanese investment firm has a long history in Latin America. In 2000, it created SoftBank Latin America Ventures to support the group’s companies in the region and invest in startups. In 2017, the parent plowed $100 million into Brazilian ride-hailing app 99. In 2018, the first Vision Fund invested $100 million in delivery startup Loggi.
The pace of investments quickened when Son created the $5 billion Latin America fund in March 2019 and put Claure in charge of it. The fund has since emerged as the most active venture capital player in the region, taking part in $18.7 billion of deals, according to data compiled by Bloomberg. It was trailed by DST Global with $16.1 billion and Sequoia Capital Operations LLC with $14.6 billion.
Claure has tapped industry veterans from Dan Loeb’s Third Point and JPMorgan Chase & Co. to help oversee the fund. Paulo Passoni joined as investment partner from Third Point to work alongside SoftBank’s Shu Nyatta. André Maciel, who ran JPMorgan’s investment-banking advisory business for Brazil, came in as a managing partner to helm the fund’s Brazil office.
The first Latin America fund has already poured more than $5 billion into the region’s tech ventures, according to one of the people. SoftBank holds stakes in six of the 10 most valuable startups, including Mexican used-car platform Kavak and Brazilian real estate operator Loft. The Tokyo-based company booked a $1.77 billion gain on the investments last fiscal year.
The Latin America portfolio produced a 62% net equity internal rate of return as of the end of March. That compares with a 39% IRR for the first Vision Fund and 119% for Vision Fund 2. The returns have risen sharply since March to rival those of VF2, one of the people familiar said. (Bloomberg)
Source: Bloomberg data
The world’s fastest growing retail E-commerce region
Retail ecommerce sales in Latin America grew 63.3% in 2020 to $104.60 billion. This was five times greater than the 12.5% growth we estimated in our pre-pandemic November 2019 forecast and more than triple the 19.4% estimated growth in our May 2020 forecast.
In 2020 LATAM became the world’s fastest-growing retail ecommerce market.Physical store closures, coupled with government-mandated lockdowns, hurt retailers’ bottom lines last year. This year we forecast that retail sales will return to growth in each of the countries we cover.
Until the pandemic, retail ecommerce was still in the early stages of consumer adoption. But in 2020, as retailers and consumers quickly pivoted toward ecommerce, sales soared 63.3% and surpassed the $100 billion mark for the first time.
From 2016 to 2019, mobile’s share of retail ecommerce sales in Latin America nearly doubled from 20.9% to 40.2%. This year, we forecast that nearly half (48.8%) of retail ecommerce sales will take place on mobile devices.
Emarketer forecasts that in 2020 38 million consumers in Latin America were first-time digital buyers. This year, total digital buyers will rise to 249 million, or nearly half the region’s population ages 14 and older. How are you positioning your portfolio to benefit from the rise of Ecommerce in Latin America? (eMarketer)
Source: eMarketer, May 2021
Fitch releases LATAM sustainable bond report
Sustainable bonds are a growing presence across Latin American cross-border issuers, and Fitch Ratings expects continued growth as market participants increase their awareness of and interest in Environmental, Social and Governance (ESG) factors.
“Sustainability-linked notes have been increasingly issued in Latin America since 2020, and the momentum of the Green, Social, Sustainability and Sustainability-linked (GSSS) market continues,” said Fernanda Rezende, Senior Director. Sustainable bonds represented 5% of total Latin America nonfinancial corporate cross-border bond issuances during 2020 and 30% YTD through July 2021.
Development of the GSSS bond market is required to maintain global consistency of information transparency, framework standardization, and taxonomic development and improvement. These factors have become priorities for the GSSS bond market. “The financial market plays an important role in redirecting capital toward sustainable activities,” said Rezende.
A new Fitch report (Latin American Sustainable Bond Market (A Growing Presence) explains the evolution of sustainable bonds issued by cross-border LatAm corporates and analyzes the distribution across ratings, countries and sectors. It also includes the benefits, challenges and concerns of the growing GSSS market. The report summarizes 22 sustainability and sustainability-linked notes, listing their specific terms and conditions. (FitchRatings)
Source: Bloomberg. Note: 2014-2020 Data is full year, excluding local currency debt. 2021 is through March 9.
ILO: 23 Million transitioned to teleworking during COVID-19
- Working from home is not a new phenomenon. However, with the emergence of the COVID-19 pandemic and the lockdown measures implemented to address the health emergency, this work arrangement increased significantly in Latin America and the Caribbean, as it did in the rest of the world.
- Most activities that began to be carried out at home rely on information and communication technologies (ICTs), which led to a significant increase in teleworking.
- In the countries of the region included in this study, between 20 and 30 per cent of employees who were working did so from home during the lockdown period. In 2019, that figure was less than three per cent.
- An estimated 23 million people teleworked in the region during the second quarter of 2020.
- Thus, remote work facilitated the continuity of certain economic activities and the employment relationship. This was particularly important considering the devastating impact of the crisis on the region’s labour markets, which was reflected in significant job losses and reduced working hours.
- Although this phenomenon is not new, several key dimensions differentiate the nature of work from home before and during the lockdown and restricted-mobility measures.
- Before the pandemic, workers combined working from home with working on the employer’s premises. During the lockdown, however, it became the exclusive mode of work in many cases. Previously, remote work had usually been a planned, voluntary option for both parties. With the pandemic, however, this work arrangement became one of the few alternatives to continue economic activity and employment in exceptional circumstances.
- While working from home was previously a work arrangement that was expected to contribute to improving the work-life balance, during the health crisis, the difficulties in carrying out work from home increased owing to the closure of schools and care facilities. This particularly affected women, since household responsibilities continue to fall largely on them.
- Not surprisingly, the possibility of working from home depends -among other factors- on the type and nature of the occupation and job duties, as well as on effective access to the technologies necessary to perform work remotely.
- Formal employees, adult employees, more highly educated employees and those employed in professional, technical, managerial and administrative occupations made more intensive use of this work arrangement. Employed persons who were able to continue with their activities from home had higher average earnings prior to the pandemic than other workers.
- The opposite trend is observed among informal, own-account and youth workers, and those with less education and lower incomes. This group experienced the most job losses and reduction in hours worked, especially during the first half of 2020.
- In a region characterized by labour structures with low overall use of ICTs and high technology gaps, it was not surprising that the increase in the incidence of working from home and especially telework varied among the different groups of workers. f This is an “ongoing process” where the incidence and characteristics of this form of work differ not only from those observed prior to the pandemic but will also most likely differ from the post-pandemic scenario.
- The region has reported progress in the regulation of teleworking. However, the unprecedented increase in this type of work revealed multiple challenges that must be addressed to ensure that home-based workers do not lose the rights enjoyed by employees who work on the employer’s premises.
- From the perspective of enterprises, teleworking also poses challenges to guaranteeing that operations will continue and that the productivity levels required for their survival will be maintained.
- It is possible to identify good practices that protect the rights, health and well-being of workers, that create an organizational culture that efficiently takes advantage of the possibilities offered by new technologies, and that lead to productivity gains and efficient results according to the enterprise’s objectives and possibilities.
- The Resolution concerning a global call to action for a human-centred recovery from the COVID-19 crisis that is inclusive, sustainable and resilient, adopted by the International Labour Conference No. 109 in June 2021, urges, among other initiatives, “to introduce, utilize and adapt teleworking and other new work arrangements so as to retain jobs and expand decent work opportunities through, among other means, regulation, social dialogue, collective bargaining, workplace cooperation and efforts to reduce disparities in digital access, respecting international labour standards and privacy and promoting data protection and work-life balance.”