Whether it´s energy sector deals in Mexico, M&A in Chile, or corruption cases in Brazil, the Latin American market is generating work for Iberian lawyers from a wide range of practice areas
When it comes to providing opportunities for law firms, Latin America seems to offer something for everyone. While some countries offer the necessary stability to facilitate M&A transactions, others that may be plagued by political corruption for example, can provide rich pickings for firms' arbitration practices. In addition, outbound investment from Latin America is also a potential source of work for Spanish law firms – indeed, lawyers argue that Spain could do considerably more to enhance its reputation as a gateway to Europe for Latin American investors.
Julio Veloso, partner at Broseta, argues that the Pacific
Alliance countries are home to the most dynamic economies in the
region, particularly now that the Brazilian market is stagnant.
"Colombia is where the growth opportunities are," he
says. This is because, in the view of some lawyers, Mexico is
relying on volatile sectors such as oil production, as well as on
its links to the US. Meanwhile, Veloso agrees that Chile is the
most stable economy in the region, but adds that the country is
currently experiencing some political uncertainty that makes it
less attractive to foreign investment. Elsewhere, a new
pro-business president in Peru has engendered optimism among
investors, according to Veloso.
Mexico: Huge
potential
Growth prospects in the Pacific Alliance are connected to the
implementation of the Trans-Pacific Partnership (TPP), according to
Luis Riesgo, partner-in-charge of the Latin America practice group
at Jones Day. However, he warns that the outcome of the US
elections in November will have an impact on trade deals between
the regional blocs. "Mexico will greatly benefit from the TPP
once everything is in place," he concludes.
The efforts of the Mexican government to liberalise the energy
sector in order to attract investment has been very positive,
according to Ignacio Paz, co-head of Latin America at Herbert Smith
Freehills. Though the energy reform has yet to bring the expected
results, Paz says there was "no denying that the potential of
Mexico is huge". Paz is also cautiously optimistic about
Colombia's prospects: "The political situation remains
difficult and the public-private partnership (PPP) law was approved
some years ago and we are still waiting to see results."
Meanwhile, Paz says there is also some potential in the Chilean
market: "It's a stable, sophisticated and mature market
where M&A opportunities are limited but interesting," he
says.
A number of law firms are paying particularly close attention to
the Colombian and Mexican markets, according to Eversheds Nicea
partner María Hernández. "Clearly there are
opportunities in infrastructure, energy and compliance,
particularly when you already have proven expertise in those
fields," she adds. Jose Maria Viñals, partner at
Lupicinio International Law Firm, said he expects more
privatisation, energy and infrastructure work in Colombia and
Mexico. Meanwhile, Baker & McKenzie partner José
Morán highlights the fact that US investment banks –
including Goldman Sachs – have already made significant
commitments to Colombian transportation projects.
Javier Villasante, partner at Cuatrecasas, Gonçalves Pereira
argues that Mexico is the jewel in the crown of the Pacific
Alliance. "The Pacific Alliance starts with Mexico, this is a
country with a superior economy, it is close to the US and it has
undertaken deep structural reforms in energy, telecommunications
and electricity," he says. Villasante draws parallels between
the changes that have taken place in Mexico with the privatisation
process that took place in several sectors in Spain in the 1990s.
He adds that Spanish law firms that gained expertise when working
on Spanish privatisations will be able to capitalise on the current
opportunities in Mexico. Meanwhile, Uría Menéndez has
identified energy projects in Mexico – as well as
infrastructure projects in Colombia – as significant
opportunities.
Wave of corruption
While there is considerable uncertainty in Brazil – due to
the economy being in a tailspin, an impeached president and a wave
of corruption scandals – there remain significant
opportunities for law firms, according to Riesgo. He says that,
while the flow of M&A deals may be drying up, there is
currently high demand for advice on global investigations,
compliance and corruption cases.
Raquel Florez, partner and co-head of Latin America at Freshfields,
says the Petrobras scandal was a watershed moment in the fight
against corruption in Brazil. However, she adds that the country
has strong and resilient institutions and an independent judiciary,
which, she says, bodes well for the future of Brazil. Florez says
global investigations are generating work for many lawyers, adding
that there are also many opportunities related to distressed
assets.
Beyond the Pacific
Alliance, lawyers say there are opportunities for investment in a
number of other Latin American economies, provided the risk is
properly managed. Meanwhile, Florez says arbitration has been a
particularly active area in countries where "assets have been
confiscated, such as Argentina and Venezuela, for example".
She adds: "Argentina is now attracting interest from our
clients – there is an uptick of business confidence as a
result of the new government."
Argentina: Confidence will return
Even when undergoing difficult times, Argentina has provided law
firms with fruitful opportunities in a range of sectors, including
energy in particular, according to Javier Fernández
Samaniego, partner at Bird & Bird. Veloso also predicts a
brighter future for the country: "Argentina will rebuild the
rule of law and the business confidence will return."
The challenges faced by Argentina are not unusual, according to
Veloso. "Most countries now have to work out their legal
issues, put those new laws into practice and make all those planned
projects move forward," he says. Veloso warns that in certain
countries, civil servants fear signing off projects because their
predecessors are now in jail or pending trial after anti-corruption
drives.
A number of smaller Latin
American countries are also generating interest among international
investors, according to Paz. "I see a lot of interest in
Uruguay and Cuba," he says. Paz adds that Latin America is
attractive to law firms because of the balance in economic cycles
across the region. "There are certain countries where the
opportunities are plentiful for projects and M&A because the
business climate is safe, and there are places where you go to do
arbitration and to defend an investment when things go wrong,"
he says. Law firms also have an opportunity to capitalise on Latin
American investment coming to Europe, Paz says. "When
economies take off, you notice outbound investment, not just in the
region, but also in Europe and elsewhere – Spain is well
placed to be a hub that channels Latin American investment towards
Europe." Veloso agrees that Spain can be a gateway to Europe,
provided that law firms give "added value to those seeking
opportunities".
Spain: Gateway to Europe?
However, José María Viñals, partner at
Lupicinio International Law Firm, says the role of Spain as a
gateway for Latin American investment into continental Europe could
be enhanced – particularly given the advent of Brexit –
through the introduction of more business-friendly administrative
and tax measures. He adds that law firms should also look for
opportunities beyond the Pacific Alliance, in countries where there
are challenges for international investors – Viñals
says Spanish law firms are well placed to give valuable advice in
such circumstances.
What strategies are law firms adopting in order to capitalise on
such opportunities? Fausto Pérez Miura, partner at
Pérez-Llorca, says his firm's approach is to build a
team "as if it were one single team, with the three to four
best local independent firms" in the relevant country.
Meanwhile, Veloso says clients of different sizes have different
needs and therefore require different types of service. As one
partner put it, "you need to understand your niche and make
your strategy work."
Javier Mata, partner at Olleros Abogados, says that Latin America
has a tumultuous history and that certain countries still have
complicated political situations that impact on businesses and
their legal advisors. However, he adds that, despite this
environment, "larger law firms are more of a common sight in
the region these days". Mata says there are significant
opportunities for law firms in the Caribbean countries,
particularly Cuba and the Dominican Republic. He adds that, given
the large size of Latin America, firms need to focus. He continues:
"The Caribbean is our focus." Meanwhile, Bolivia, Ecuador
and Central America also harbour interesting opportunities,
according to Veloso, with potential for inbound and outbound
investment work, in particular.
Cuba: No rush to evolve
Viñals says his firm's considerable experience in Cuba
means the firm is able to "facilitate potential investments on
the island and guide clients through the particularities of doing
business there". He adds that, under existing Cuban
regulations, it is not possible to incorporate a foreign law firm
in the country.
However, Viñals
says his firm is continuing to search the market for instructions
from foreign investors. Meanwhile, Olleros Abogados is keen to open
an office in Cuba in order to capitalise on potential
opportunities, according to Mata. However, the current system of
compulsory partnerships with the Cuban state law firms makes it
unrealistic. "The country will evolve, it's unavoidable,
but it will be done Cuban-style, with no rush," Mata
says.
Hernández is
cautious with regard to Cuban opportunities for Spanish law firms.
"The influence of the US is noticeable, they are way ahead of
us in a number of markets," she says. There are a number of
opportunities for US investors in the Cuban telecoms and renewables
sectors, according to law firm Hunton & Williams. However,
Florez highlights the fact that US law firms are still prevented
from doing business in Cuba and adds that interest in the country
among international investors is increasing.
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