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Nov 06, 2017

Being big when small in Latin America

Andrew Holt talks to Sandra Sinicco, CEO of Brazilian holding company GrupoCASA, and Vera Dantas, partner at Noronha Advogados, about small-cap opportunities in Latin America

What are the benefits for investors getting involved in the Latin America region?

Sandra Sinicco: First of all, the amount of invested money required is lower than in the UK due to the currency exchange. Secondly, we have a huge market, one that is very keen on all types of technology and innovative solutions. This makes a real difference when you want to test your product/service on large numbers of users, all at different levels of maturity in using technology. In addition, when the solution escalates and integrates with the market, the return on investment is pretty significant.

Which countries in the region stand out for investors, and why?

SS: Brazil is, no doubt, one of the best (mainly Sao Paulo) because of its huge market of 220 mn inhabitants, a large proportion of whom are addicted to new solutions that could provide them with a better quality of life. In addition, new legislation has been introduced that will strengthen the system. Aside from Brazil, Chile, Colombia and Mexico are in the same league. I would like to highlight Chile, which these days has the most mature market system for start-ups in Latin America.

What are the advantages of Latin American small caps, from an investor perspective?

SS: The amount of money investors need to invest is less than the investment required in companies in the UK, with the disadvantage of having fewer shares.

What are the aims of The LatAm Edge Awards? 

SS: To open the opportunity for scale-ups to expand to the UK with an extensive support network to help the company establish itself in little time. This includes the support of 19 companies that will provide services in their area of expertise free of charge for one year. This opportunity, in our opinion, is worth much more than money because of the real connections the support network offers, which is key for companies looking to expand to new territory.

Have these been fulfilled? 

SS: Yes, they have. The first company to win the LatAm Edge Awards in 2016 was a Chilean specialist in biometrics. It opened a branch in the UK and is now pitching for business with several banks and finance companies here. It was able to set up its business here very smoothly with the help of the support network. This year’s winner is a Brazilian company with an amazing opportunity globally; we and the extensive support network are very happy and hopeful that it will succeed in one of the most competitive markets in the world: the UK.

What are  corporate governance structures like in Latin America? And what needs to improve?

Vera Dantas: With regard to Brazil, I believe we have evolved significantly, especially during the last 15 years, as far as listed companies are concerned. The Brazilian Stock Exchange has a system that classifies companies in accordance with their level of corporate governance.

There has been some development with private companies, but it is not possible, evidently, to compare with levels of corporate governance in listed companies. It is not possible to comment on other companies because the legal rules vary from country to country. So when considering investing in Latin America, lawyers from the proposed jurisdiction need to be consulted.