Foreign investment in Chile as of July surpasses the total for 2018
Foreign direct investment (FDI) continues to arrive in Chile from different places. Of particular note is that coming from the United States, multi-latinas and, in a very particular way, Spain: this has not ceased since the 1980s.
As of July 2019, Chile had a net flow of FDI of 8.359 billion dollars; this is equivalent to a rise of 83% compared to the same previous period, according to the Central Bank. The last month accounted for 2,570 million, a figure surpassed only by the 3,025 million reached in April.
Another interesting fact of the accumulated in these seven months is the different allocations of the total: the shares in the capital represented 59% of FDI, that is to say, 4,937 million dollars; the reinvestment of profits had a share of 34%; finally, the related debt accounted for 7%.
In general, the largest FDI in Latin America and the Caribbean came from Europe, which was concentrated in the Southern Cone and the United States, with a greater presence in Mexico and Central America. The outlook for 2019 differs between the United Nations Conference on Trade and Development (UNCTAD) and the Economic Commission for Latin America and the Caribbean (ECLAC). The first maintains that investments will be reduced by 5% compared to 2018, while the second states that this decrease will be more moderate, between 1% and 2%. At the same time, China has concentrated mainly on Brazil and Chile - in any case, its presence decreased last year.
Opportunities by region
Concentrating on Chile, whenever we talk about investments we tend to say that the great opportunities in most sectors are to be found throughout all Chilean regions without exception. We find mining mainly in the north and central area. Infrastructures are scattered throughout the territory, there are all kinds and sizes. For example, the largest desalination plant in Latin America will be located in the Atacama, with an estimated investment of 1.2 billion dollars and the creation of 1,600 jobs.
In energy, be it generation, distribution or distribution, there are countless projects scattered throughout the Chilean map. In telecommunications, wired both in the interior of the country and international connections with the rest of Latin America and Asia.
As for agro-industry, from Arica and Parinacota, the border with Peru and Bolivia, greenhouses as well as in the south; crops and processing area from Santiago to Magallanes. Forestal, from Maule to the region of Los Lagos. Aquaculture and fishing, along a very extensive coastline. Technologies and digitization of companies, Chile as a whole. All over the country, logistics: ports, railways, airports, subways, etc.; and education, both professional and university.
A 60-day report by Hudson Bankers on Chile's financial sector accounts for the following transactions: LarrainVial entered the multi-family offices (MFO) business with the purchase of Alcalá Inversiones. Alcalá is one of the oldest MFOs in Chile. It currently manages $650 million in assets.
Another was the purchase of a 39% stake in the insurance company AVLA. With operations in Chile and Peru, AVLA has more than 13,000 customers served and an annual turnover of nearly $80 million. The investment was made by a group of investors, led by the German development bank DEG (through Landsberg Investment) and by the Colombian private equity fund Altra Investments, with significant experience in the region.
One more, the acquisition of the Colombian Colfondos by the Chilean pension fund administrator (AFP), Hábitat. The deal is valued at $172 million and includes the total purchase from owners Scotiabank and Mercantil Colpatria.
70 billion in sustainable projects
Finally, in the August 2019 report of the office of Sustainable Project Management (GPS) of the Ministry of Economy of Chile on the investment projects currently monitored by them, indicates the existence of 265 in processing or construction stage, with an estimated investment of $ 73,984 billion dollars for the next five years. Its materialization will generate 167,519 direct jobs in construction and a total of 343,808 jobs in operation (85,952 direct and 257,856 indirect).
The depreciation of Latin American currencies and lower economic growth is generating very interesting opportunities for entrepreneurs who are looking for assets that allow them to grow by gaining market share. There are others that are waiting for improvements in the markets before going out to meet new partners.
The following monthly report, corresponding to the month of August 2019, contains information on investment projects currently monitored by the GPS Office. The main points to highlight are:
- It monitors 265 investment projects in the processing or construction stage, with an estimated investment of 73,984 million dollars for the next five years.
- The materialization of these investment projects will generate 167,519 direct jobs in construction and a total of 343,808 jobs in operation (85,952 direct and 257,856 indirect). The report breaks down the jobs by region and commune.
- Outstanding projects that entered the Environmental Evaluation System in the month: o Mall Vivo Santiago (construction stage), real estate (R. Metropolitana, 215 million dollars, 1,200 jobs in construction).
- Outstanding projects approved environmentally (obtaining RCA) in the month: o Ciudad del Parque, real estate (R. del Bío Bío, 118 million dollars, 355 jobs in construction).
- Outstanding projects that began construction in the month: o Campos del Sol, Energy (R. de Atacama, 360 million dollars, 750 jobs in construction).
Author: Tomás Pablo Roa, Executive Chairman of Wolf and Pablo Consultores