First in Vistra's LatAm Roundtable Series explores family enterprises

26 March 2019
On 15 March, Vistra's LatAm team in London hosted the first in a series of events, The LatAm Roundtables, which explored the complexity of international family enterprises in the Latin America region.

Vistra have been managing international family enterprises in the region for over three decades, addressing corporate affairs and family related structuring matters. The event featured several expert speakers from the Latin American community who prompted some thought-provoking conversations: 

  • Regional outlook by Jimena Blanco, Head of Americas Politics Research at Verisk Maplecroft
  • Family business in Argentina by Federico Cincotta, Partner at Cincotta Advisory & Trevor Turner, Director & Independent Financial Adviser at Turner Wealth & Consultancy Ltd
  • A closer look at Brazil’s highly mobile HWNI community in 2019 by Carlos Hawker, Partner at LCR Capital & Luiz Costa, Solicitor at Flechter Day

Below are the top three key themes discussed which conveyed some of the views expressed by the panellists and audience.

1. As reform agendas in Brazil and Mexico are taking shape – uncertainties for family businesses remain  

Entering Q2 2019, Latin America’s three leading economies continue to suffer from an uncertain political outlook – although these are different in nature. Whilst Mexico’s Andrés Manuel López Obrador and Brazil’s Bolsonaro try to pave the way for their respective reform agenda – one on the far left and the other on the far right - Argentina’s Macri has to ensure that he can keep some sort of momentum aiming for a second term in office. With an overall rather pessimistic outlook in terms regional economic growth, leading regional family enterprises continue to closely monitor reformist government agendas, in particular to a change in fiscal policies, tax reforms and the overall business environment.

2. As Argentina’s leading family businesses look for increased internationalization reliable alliances and partners gain traction

Similar to its Latin American peers at least 80% of the country’s 1.2 million businesses are privately owned and account for over 50% of Argentina’s GDP. Argentina’s ‘Top 50’ business families are worth 70 billion USD altogether, which equates to 10% of the country’s 2017 total estimated GDP. Local family owned businesses are increasingly looking into global cross border expansion as they assess possibilities of consolidating their operation in professionally managed holding companies. As Argentine family held enterprises seek foreign allies for their international ventures, they appear to have outgrown their traditional (domestic) advisors. This, paired with the fact that only 20% of family businesses have some sort of formal succession plan in place, should certainly resonate with the professional advisory community. 

3. As Bolsonaro’s fiscal agenda evolves, mobile families are expected to make moves

Brazil’s extremely ambitious reform agenda under new president Bolsonaro continues to be closely observed by the country’s HNWI community. The urgently required pension and tax reforms are likely to be tied to Bolsonaro political fate and approval rates with the heart of Brazil’s society. However, imposing a 20% tax on dividends towards the end of 2019 is expected to have a material impact on outbound mobility trends.

The announced government’s divestment agenda reducing its ownership in major company such as Petrobras is expected to offer opportunities for international investors.

At Vistra we have extensive experience with managing complex investment - and asset holding as well as operating structures for cross border families and family businesses. To learn more about this, and our global Vistra Private Office offering, please click here or contact Julius Bozzino or Raul Markos.