KKR and SoftBank Group’s Recent Deal Activity in Latin America Highlights Growing International Interest

Deal-specific highlights include KKR’s acquisition of Telefónica Chile’s fiber optic network to create first open access network in Chile and Softbank’s involvement in $83M investment in Brazilian education startup Descomplica. Lightspeed announced a partnership with dLocal to facilitate payments for independent merchants in Mexico. Two of China's largest lenders to the Latin America and Caribbean region opted out in 2020, making no loans to the region for the first time in 15 years.


Impressive investment activity by global investment giants in LatAm infrastructure, education, and payment services.

Deal-specific highlights include KKR’s acquisition of Telefónica Chile’s fiber optic network to create first open access network in Chile and Softbank’s involvement in $83M investment in Brazilian education startup Descomplica. Lightspeed announced a partnership with dLocal to facilitate payments for independent merchants in Mexico. Two of China's largest lenders to the Latin America and Caribbean region opted out in 2020, making no loans to the region for the first time in 15 years.

KKR to Acquire Telefónica Chile’s Wholesale Fiber Optic Network to Create First Open Access Network in Chile

Leading global investment firm KKR announced it has entered into an agreement with Telefónica, a leading global telecommunications company, to establish Chile’s first open access wholesale fiber optics company with the mission to bring greater broadband access across Chile.

Business Wire reports that KKR will acquire a majority stake in Telefónica Chile’s existing fiber optic network- the largest fiber optic network in Chile- and transform it to an open access network, via a newly established independent Chilean company with assets managed locally. Telefónica will hold a 40% stake in the business.

The newly formed enterprise will serve as Chile’s first wholesale digital infrastructure network open to all current and future telecom operators in Chile, creating a competitive marketplace benefiting consumers and businesses across the country. Although Chile leads Latin America in GDP per capita, it is currently third-ranked in fiber-to-the-home connectivity.

Upon approval, the new business plans to expand broadband coverage in Chile from 2 million households today to a minimum of 3.5 million households by 2023.The newly formed network will provide access to under-served areas, with more than two-thirds of households covered by the network being outside of high-income urban areas.

Softbank Leads $83M Investment in Brazil Education Startup Descomplica

Led by Softbank Group, a group of investors has commited 450 million reais ($83 million USD) in Brazilian test-prep startup Descomplica, which has seen demand for its online learning services surge in the pandemic, the company announced.

Along with Softbank, investors in the round include Invus Group, the Chan Zuckerberg initiative and U2 guitarist The Edge.

According to Nasdaq, Descomplica focuses on preparing for standardized tests to enter university and civil service, and launched undergraduate courses last year. Since its founding in 2011, the company has accrued 5 million monthly users between test-prep and higher education students after a boost from pandemic lockdowns.

Descomplica explained it would use the funds to make acquisitions and develop new products, including 33 new courses by next year.

"We want to create the biggest university in Brazil, quickly reaching 1 million students with a 100% digital model," said Marco Fisbhen, Descomplica's Founder and Chief Executive.

Lightspeed Partners with dLocal to Power Payments for Independent Merchants in Mexico

dLocal, a top payment platform connecting global merchants to emerging markets, and Lightspeed, a leading provider of cloud-based, omnichannel commerce platforms, have announced a new partnership. The collaboration will allow Lightspeed merchants to accept local payment options across Latin America as the small business market in that region undergoes a rapid digital transformation.

Business Wire reports that the direct integration- already active in Mexico- enables Lightspeed eCommerce merchants to seamlessly begin accepting local payment methods in Mexican pesos. This industry-specific solution will enable merchants to facilitate direct bank-to-bank transfers through Mexico’s SPEI system, accept cash through digital voucher payments such as Oxxo, and accept local credit and debit cards such as Visa, Mastercard, American Express or Mexico’s Carnet Debit.

This year, online spending in Mexico is projected at $48 billion, while only 26% of Mexico's online purchases were paid via domestic debit and credit cards. OXXO, the leading cash payment method in Mexico, generates 20% of eCommerce sales in the country, according to dLocal data. With the ability to offer a wider variety of payment methods, Lightspeed merchants can expect a revenue injection from new customers with increased access to their merchandise.

Podcast: Two Big Chinese Lenders Skip LatAm Loans in 2020

Two of China's largest lenders to the Latin America and Caribbean region opted out in 2020, making no loans to the region for the first time in 15 years, according to research published on Monday.

While the loans may not have materialized, it is not a sign that China's interest in the region has gone to zero. Chinese mergers and acquisitions activity reached $7 billion, up from $4.3 billion in 2019, data from the China-Latin America Economic Bulletin's 2021 edition showed.

The database, which is a collaboration between the Inter-American Dialogue and the Global China Initiative at Boston University’s Global Development Policy Center, showed no new financing commitments signed in the LAC region by China’s two policy banks, China Development Bank (CDB) and the Export-Import Bank of China (Chexim).

"We were surprised to see that zero number pop up on our screen, but we will say it has been, everyone on our team has seen it declining for the last several years since the peak a few years ago. So it wasn't shocking to see the number diminish, but this is really a pivot towards other ways of interacting," Rebecca Ray, economist and research associate at BU's Global Development Policy Center said in an interview with LatinFinance.

Ray highlighted that the deals that made up the $7 billion in M&A activity last year, were mostly planned, initially, in 2019, before the pandemic hit, and were finalized in 2020.

"So it's not entirely that the typical story that during a panic year, Western investors will sell out of their assets in developing countries and Chinese companies are well positioned to buy them. That's certainly a backdrop, but it's not the whole story. There's been a slowdown in Latin American and Caribbean growth for the last several years, even before the pandemic year of 2020, because Western investors had begun to settle out of that region already, and particularly in the infrastructure sector," Ray noted.

The full podcast episode is accessible here.

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