Argentina's Top Lawyer Sees Plenty of Deals Despite Recession
(Bloomberg) -- The second Argentine recession in three years and a corruption scandal engulfing some of the county’s top companies has the investment banking industry down, but not out, according to the head of the country’s largest law firm.
"Despite the difficulties, we continue to see growth and activity in the areas of infrastructure and energy," said Santiago Carregal, chairman and the head of the banking and finance department of Marval, O’Farrell & Mairal.
A $57.1 billion credit line from the International Monetary Fund is set to free up between $3 billion and $4 billion in private capital to finance infrastructure projects that have been delayed by a corruption probe, said Carregal, who specializes in capital markets, corporate finance and M&A. That investment could reach as much as $11 billion as the government promotes the public-private partnership model, he said.
"The PPP system is an excellent tool for the government to channel investment in infrastructure," Carregal said. "Following the recent agreement with the IMF we are seeing that some toll road PPP projects are more likely to secure bank financing."
The burgeoning corruption scandal over alleged payments by business executives to win government contracts could also pave the way for a host of distressed asset sales by companies involved in the investigation. Those companies include Albanesi SA, whose chairman was detained and freed after promising to cooperate with the probe.
The investigation may also trigger more mergers and acquisitions in the energy industry, especially around the Vaca Muerta gas field, attracting investment from oil giants Chevron Corp. and Exxon Mobil Corp. Vaca Muerta is touted as the next Permian Basin, which is the busiest U.S. oil field located in Texas and New Mexico.
"There is a consolidation trend in the area of energy,” Carregal, 57, said at his office in downtown Buenos Aires. "Unconventional production of oil and gas in the Vaca Muerta field is growing steadily."
Marval, which employs more than 300 lawyers, helps negotiate about 60 percent of local deals in Argentina. Last year, the firm worked for Loma Negra Cia Industrial Argentina SA when it raised $954 million in the largest initial public offering by an Argentine company since YPF SA’s $2.7 billion IPO in 1993, according to data compiled by Bloomberg.
The Loma Negra deal was supposed to be an ice breaker for at least $2.5 billion in additional capital raising deals of which only $800 million materialized as the second-largest economy in South America slid back into recession and its currency collapsed.
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