Top headlines and news impacting Latin America, Africa, and Southeast Asia commercial real estate.
David Cameron and Javier Milei have "agreed to disagree" on the matter of who owns the strategically positioned Falkland Islands. The Argentinian claims are surprisingly sound but the Brits have control and the adage that "possession is 9/10 of the law" is the rallying cry. There is zero chance Cameron raised this thorny issue, it was a maneuver by Milei to put the Falklands back on the table to gain negotiating leverage. As austerity gets tougher for the Argentine people, look for Milei to rattle sabers on this issue to keep his people behind him.
In a David and Goliath scenario, an El Salvadoran family-owned retailer with 111 stores has successfully acquired a controlling stake in Colombia's largest retailer which has five times the number of stores in Colombia, Uruguay, and Argentina. The acquisition is based on a valuation of $1.18 billion, representing a 51% premium of the share price before the public takeover process was initiated. Previous offers at a similar valuation by a Colombian billionaire were rejected which would have placed the formerly French retailer in Colombian hands.
Brazil’s President Lula da Silva, who previously governed Brazil between 2003 and 2010, is looking to strengthen the role of the state in the economy to lift the stagnant living standards of the nation of more than 200 million. Everyone hopes Lula can revive the magic of his first stint at the helm. Skeptics point to corruption concerns and the lingering cumbersome bureaucracy and piles of red tape as better targets.
China has risen to a position of dominance in Latin America which is surprising given the geographic and cultural proximity the region has to the regional superpower. A pushback from Washington DC seems imminent which represents an opportunity for some investors and strategically positioned countries.
Zambia's call for proposals to link Lake Tanganyika to TAZARA by more rail is likely an effort to make the TAZARA railway upgrades the Chinese will start this year economically feasible. Connecting Zambia's existing rail infrastructure to the lake means access to Burundi and more cities in Tanzania and the DRC. Couple this with the support the Americans and Europeans are providing on the Lobito Corridor and quite a year is shaping up for the region in terms of rail upgrades.
One of the Development Finance Corporation's 17 most recently approved investments, totaling $3.3 billion, will be for real estate in Zambia. The funding will come in the form of a $17.1 million loan to fund a hotel in Zambia. The investment is labeled "Infrastructure Growth in Zambia" and not explicitly as a real estate investment.
Sanlam is the dominant insurer in South Africa with revenues of $4.6 billion in 2022, 25% of which derived from international operations. Most of the international operations come from Africa, but it also sells insurance in North America, Australia, and other markets. It entered India in 2005 and in 2015 invested significantly to acquire 51% of the Indian joint venture. As South Africa continues to deteriorate look for more companies to seek growth in countries that can at least keep the lights on.
The combined entity will be a leading infrastructure investor across the globe and it may in the future see value in making more targeted real estate investments in the emerging markets. Actis is a leading emerging market investor with impressive track records in Africa, Latin America, and Southeast Asia. General Atlantic dabbles in emerging market investing but it's not part of their DNA as is the case with Actis.
Apollo is exiting its equity real estate business in Asia, but sticking by the credit strategy for the asset class. It raised an equity fund for Asian real estate in 2020 of nearly $500 million and prospects for a third equity fund were bleak.
American investors tend to view Vietnam through the lens of manufacturing and investment flows and trade agreements reflect that perception. The EU-Vietnam trade agreement far exceeds the American counterpart and provides for almost 100% removal of tariffs between the nations which has resulted in a 25% surge (30% with America in the same period) in bilateral trade since implemented in 2019.
It's not yet known what the $2 billion will be used for but most likely to expand the already successful operations. Hysong is an early investor in Vietnam and ranks in the top 5% of foreign firms in terms of invested amounts and revenues generated in Vietnam.
Blackstone's plan to double its private equity headcount in Singapore indicates its view on the attractiveness of the region's deal flow and future potential. Southeast Asia has solid GDP growth rates, rising middle classes, and improving transparency.