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A Site Selection Web Exclusive, August 2013
WEB Exclusive story

The Rise of the 'Multilatinas'

A significant new breed of MNCs is adding to Latin America's
allure as a destination for foreign direct investment.


he term Multilatina might have been coined very recently, but the formation and evolution of these companies has been going on for years. It's been perhaps a decade-long process of international expansion of these homegrown Latin American multinational corporations that has made them relevant on a global scale. More importantly, the recent Latin American boom period created ideal conditions for these firms to expand, and the last five years have marked one of the most active markets for Mergers & Acquisitions the region has ever seen. As a result, Latin American countries have in one way or another become more homogenized, making it easier for investors to enter into one market and easily replicate to other countries within Latin America.

The Original Multilatinas Came from Chile

Chile was certainly the first to embark on this modern concept of international expansion, and has been the greatest contributor to today's multi-latin American companies. Their footprint spans from agricultural to mining, all the way to retail in the form of mega shopping centers and supermarket chains, even airlines. These international expansions were made possible thanks to good financing at low interest rates, which was only made possible by the record-breaking income that Chile had earned from high copper prices.

The first wave of expansion came with the neighboring Argentine "corralito", which led to capital outflows and currency devaluations in that market. While global investors were pulling out of Argentina fearful of their investments' safety, Chilean companies came in with no qualms and swooped up some of the largest groups in Argentina. The most affected sector was agroindustry, and the most notorious subsector was wine. Chilean wine companies purchased a very large proportion of Argentina's vineyards, making Malbec essentially property of Chile.

The crisis in Argentina also gave birth to the first full-fledged, homegrown modern Multilatina: Cencosud. This retail giant is a worthy opponent to the likes of Walmart and Carrefour. This group started in Chile with the mega retail store concept and became the leading player in that market. It expanded into Argentina via acquisition, a strategy it has applied since then to enter into Peru, Ecuador, Colombia, even into Brazil, the largest and most competitive retail market in the region.

Fool me once, fool me twice, not the third time…

More recently there have been more Multilatinas originating from countries other than Chile garnering attention. Chile was the pioneer of the last decade in large part because they had the right conditions at the right time. But what conditions have allowed more recent regional expansion by other countries and companies? The short answer is again good financing terms. In the case of the rest of Latin America, similarly to Chile, a small boom occurred in correlation to high export commodity prices. But that only tells half of the story. The real differentiator this time around for Latin America was the global financial crisis. To everyone's astonishment, as banks and financial systems were collapsing around the world, the Latin American banking system weathered the storm and emerged victorious on the other side. This liquidity is really what allowed the financing of the Multilatinas from their home countries and into new markets.

Back to the global financial crisis. How did Latin America survive it? Interestingly enough, the answer most cited by business and political leaders is, "We finally learned our lesson," which means that the same conditions that led to the global financial crash, i.e., irresponsible banking, were conditions not allowed in Latin American fiscal and monetary policy, banking and financial regulation. But why were there rules in place preventing these irresponsible behaviors? The simple answer is that Latin America had already had their own mini financial crises, first time back in the '60s and '70s, and then again in the '80s and '90s. The region learned from these mistakes, and countries enacted very strict regulation, oversight, and most importantly, the separation of macroeconomic policy from politics.

This is a very important lesson for economic development, as this single event caused an entire shift in the productivity and standardization of Latin American economies, making the region attractive as ever to foreign investors, and perhaps finally. and hopefully permanently, removing the image of instability the region has had historically.

Brazilian, Colombian, even Guatemalan Multilatinas

The Multi Latin American Corporation is real, continues to grow and is here to stay. These companies now even have their own annual conference, its third edition taking place in October in Panama. Even though the phenomenon is widespread and there isn't a single country or company without a good success story of neighboring expansion, there are three interesting cases worth pointing out.

Brazil: The sleeping giant has been at the forefront of Multi-latin expansion for the past five or so years, in large part thanks to the support of their BNDES (Brazilian Development Bank) in financing international projects, everything from infrastructure to transport, logistics and agroindustry, basically anything related to the commanding sectors of the economy. The BNDES alone, for example, has extended lines of credit to Central American countries for more than US$2 billion to finance everything from roads to ports and airports. But most of these Multilatinas are tucked away from the public eye. Perhaps the best known brand in this space is the Brazilian construction giant Odebrecht, with a presence in over 35 countries.

Colombia: Two Multilatinas have been at the forefront of Colombian international expansion, Aval and Bancolombia, both in the financial services space. While most foreign investors have invested in Panama or Costa Rica, many have neglected the larger markets of Guatemala, El Salvador, Honduras, and Nicaragua. Aval and Bancolombia began their trek into these markets via El Salvador. While Aval set up direct operations at first, it eventually purchased the incumbent Credomatic, with a presence in all countries. Bancolombia has gone straight in by acquiring El Salvador's largest Bank, Banco Agricola, and Guatemala's third largest bank, Banco Agromercantil.

Guatemala: Not all Multi Latin American corporations have to be giant groups from large countries, as the case of Chile has proven. But scaling back even further, small Multilatinas from Central America, Uruguay and Ecuador can also be seen across Latin America. Two noteworthy examples include Planesa and Pantaleon. Planesa is a specialized agroindustrial company with origins in Guatemala that expanded into Mexico and subsequently into Chile, allowing them to maintain a consistent supply to grocery chains in North America across all or most seasons. Pantaleon is one of the world's largest sugar companies. It started acquiring plantations and mills in other Central American countries, and amazingly enough have recently purchased a Brazilian company.

Multilatinas Pave the way for Foreign Direct Investment

While at first glance the Multilatina movement might seem like it has exhausted the market entry capabilities of large Multinational corporations, it actually has had a greater and more positive impact. Latin America long has been considered a pulverized region, each country with its own idiosyncrasies to deal with. While that is still true, one way or another, the Multilatina has forced markets, governments, legislation, capital repatriation rules and others to become more homogenized. This certainly makes it easier for investors to enter into one market and quickly make a splash in multiple countries. This has helped to make the Latin America region more attractive than ever for investment.

Estuardo Robles is an international business developer, entrepreneur and economic development trainer and is founder of The Americas IT Business & Investors Forum ( He is based in Austin, Texas.
Plaza Centro Civico, Guatemala City
Photos courtesy of Guatemala City

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