Argentina Is Mercosur Country With Most Growth Potential

Law firms anticipating growth as confidence in Argentina increases after $16.5m of sovereign debt is issued and government moves to reduce inflation and budget deficit.

Argentina offers the best growth opportunities of all the Mercosur countries, according to a new study by The Latin American Lawyer, with significant activity expected in the country's banking, finance and capital markets sectors.

A survey of lawyers in the Mercosur countries (Argentina, Brazil, Paraguay, Uruguay, Venezuela and Bolivia as an accession country) found that 55 per cent identified Argentina as having the best opportunities for growth. Around one in four respondents (27 per cent) said Brazil had the most promising prospects, while 15 per cent thought Paraguay led the way when it came to growth potential.

Confidence in Argentina is on the increase after the country reached a settlement with its "holdout creditors" that allowed it to return to international markets - in April, Argentina issued US$16.5 billion worth of sovereign debt. Meanwhile, it is also anticipated that the new government will take further measures to reduce inflation and the government's budget deficit. This new-found confidence is backed up by M&A data. Two of the ten largest transactions in the Mercosur countries in the first quarter of 2016 took place in Argentina, according to Mergermarket, with Pampa Energia acquiring Petrobras' Argentinean assets for $765 million, and the energy companies Empresa Distribuidora de Energia Norte and Empresa Distribuidora de Energia Sur being sold to a private investor for $220 million.

Private equity firms eye assets

Fernando Zoppi, partner at Argentinean law firm Pérez Alati, Grondona, Benites, Arntsen & Martínez de Hoz (h) , says there are significant opportunities for investors and law firms in Argentina, particularly in banking and finance, capital markets, corporate and infrastructure. He adds that most of the investment will come from the US where private equity firms and major banks are "eyeing Argentinean assets and the financial systems after so many years of no activity".

The US used to be a major investor in Argentina, but this changed when the country's former presidents Néstor Kirchner and Cristina Kirchner adopted policies that increased hostility towards the US and international investors. However, following the departure of the Kirchners, attitudes towards the US are softening in Argentina and this is fostering a more friendly environment for...