Investing in Emerging Markets - Brazil


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Daniel Rivera Alves
Sócio Fundador da Elit Capital


Elit Capital

Elit Capital

A new and exclusive study on the opportunities between Brazil and the U.S. have been released by the Brazilian Trade and Investment Promotion Agency (Apex-Brasil), in partnership with the Brazil-U.S. Business Council and the American Chamber of Commerce in Brasil, entitled “Bilateral Investment Map Brazil / USA”.

The study presents important investment flow data and relies upon information provided by BUREAU OF ECONOMIC ANALYSIS (BEA) and FINANCIAL TIMES (FDI Markets), for the period of 2008 to 2017, covering the immediate moment before 2008 turmoil, through the worse economic historical moment of Brazil in 2015/2016, and a highly political uncertainty period, and capture the post crisis slow recovery attempt afterwards. The complete study may be downloaded at http://www.apexbrasil.com.br/inteligenciaMercado/MapaInvestimentosBilaterais

The United States is the major source of FDI for Brazil. In 2017 US foreign direct investment position reached US$ 68 Billion (3,3% of the local GDP), representing a relevant 15% average annual growth from 2008. Brazil is the 17 th destination of American FDI, ranked 10th US greenfield investment destination, with a total of US$ 63 Bn for the period.

Elit Capital

A comprehensive M&A report provided by TTR (Transaction Track Record database) reveals that the United States ranks first for inbound acquisitions in Brazil. There were 108 acquisitions completed by US companies in 2018, totaling almost US$ 8 Billion dollars. The deals concentrate in Information Technology (22 deals), Financial and Insurance (16), Internet (15), Healthcare (15), Distribution and Retail (12), Oil and Gas (10), and in other acquisitions in relevant sectors such as Agriculture, Chemical, Transport, Consultancy and Engineering.

In a report entitled “Latin America’s missing middle of midsize firms and middle-class spending power”, on May 2019, McKinsey presents an important overview about Emerging Markets dynamics, focusing specifically on Brazil, Mexico and Colombia. Please find the full report at https://www.mckinsey.com/featured-insights/americas/latin-americas-missing-middle-of-midsize-firms-and-middle-class-spending-power?cid=eml-web

One of the main drivers of GDP growth in the region has been the expansion of the labor force, as a result of the demographic boom. Brazil is a large consumer market, the 9 th world’s largest economy, with a population of around 210 million people, and although many are still vulnerable, there is a repressed consumer market with high potential.

In Latin America smaller companies employs a large contingency of the population, with an elevated degree of informality and productivity issues to be addressed. The challenge is to improve this environment and offer ways to them to be more competitive and by consequence empowering the labor force with better compensation, boosting domestic demand and developing the consumer market.

Elit Capital

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