Argentine Companies Cost Up To 50% Less Than Comparable Regional Firms

Patrick Archer agribusiness, average prices, competitiveness, foreign investment, franchises, real estate

Companies in Argentina across industries cost up to 50% less than comparable firms in Latin America, according to a new survey of market valuations and M&A activity.

A summary of First consulting group’s findings is featured in today’s La Nacion along with graphs showing negative factors like the lack of available bank financing available to private sector companies in Argentina.

“The report, with financial projections for 2015, estimates that this (low cost) scenario could be used as an incentive that spurs the local mergers and acquisitions market. There is tremendous liquidity in the world and other markets are saturated with investments. Argentina, given its rich natural and human resources, is an attractive option for development, especially in the areas of infrastructure, mining, agribusiness and energy,” says First director Miguel Angel Arrigoni.

“However, the report also explains that, in order to receive these benefits, the country needs to establish certain requirements like a law of protection of foreign investment and improve factors like the international image and reputation which impacts everything from the inspection of official statistics to the treatment of foreign creditors,” writes La Nacion’s Carlos Sanchez Rangel.

For foreign investors with cash, the relative affordability of Argentine assets across industries is increasingly attractive. For investors in need of financing, Argentina still has a long way to go. Available bank credit as a percentage of GDP is only 16% in Argentina compared to other South American countries like Peru (31%), Colombia (50%), Brazil (71%) and Chile (106%). Argentina’s stock market capitalization as a percentage of GDP is only 9% compared to Peru (40%), Brazil (45%) and Chile (96%). (Full Story in Spanish)

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