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Brazil companies make new investments or consider ramping

up

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Economic change is spurring confidence in neighbor

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Sectors from consumer goods to oil cite interest

By Luciana Magalhaes

SAO PAULO, Feb 17 (Reuters) - Brazilian companies are

scoping out acquisition targets in Argentina, while beefing up

staff and stores in a cautious bet on President Javier Milei's

aggressive economic reforms that are beginning to stabilize the

crisis-stricken economy.

Brazilian firms, including consumer goods, services, oil and

tech, told Reuters they are looking to launch new ventures or

drafting expansion plans in Argentina, which is emerging from

years of economic chaos that had deterred investment.

Milei's tough austerity measures have helped tamp down

triple-digit inflation, overturn a deep deficit and rebuild

reserves, boosting investor confidence. But the nation is still

digging out of recession, while capital controls complicate

business.

"Argentina is back on the radar," said Rodrigo Stefanini,

CEO of Latin American operations at Stefanini Group, a Brazilian

multinational technology company with global revenues projected

to have reached some 8 billion reais ($1.4 billion) last year.

The company's annual sales jumped 15% in Argentina last year

and its workforce grew 10% to around 1,500 people. The CEO told

Reuters the firm is looking at Argentine acquisition targets for

the first time since entering the country in 1996, despite an

economic outlook that remains uncertain.

"You don't want to be the first to arrive at the party,

because you don't know if it will be a hit. But you also don't

want to be the last, because the drinks may be finished,"

Stefanini said with a smile.

"It's time to take advantage of it, before the arrival of

the Chinese and the Americans."

Proximity and the perks of the regional Mercosur trade bloc

have often put Brazilian companies ahead of the curve in riding

the regular booms and busts of the Argentine economy, although

several firms have also been burned.

Around 150 major Brazilian firms have maintained a steady

presence in Argentina, although some of those have scaled back

operations over the years, according to the Sao Paulo-based

Brazil-Argentina Chamber of Commerce.

Federico Servideo, the chamber's president, said Brazilian

companies are watching economic trends and policy changes -

potentially including a loosening of currency controls - before

ramping up capital investments in the next 12-36 months.

"There's indeed a reversal in expectations from Brazilian

investors," said Servideo.

FULL RETURN TO ARGENTINA?

Brazil's state-run oil firm Petrobras is

considering a new bet on Argentina after signing a memorandum of

understanding with Argentine peer YPF last September

to explore joint investments in exploration and production.

Petrobras, which is already part of a consortium operating

two concessions in Argentina's Vaca Muerta shale region, told

Reuters it is eyeing additional ventures.

Brazil-based CVC Corp, one of the largest travel

groups in Latin America, is already expanding in Argentina,

where it first arrived in 2018. The firm opened 42 storefronts

in Argentina last year and aims for similar this year.

"We've always firmly believed in the Argentine tourism

market," CVC Corp Chief Executive Fabio Godinho told Reuters.

Cambuci SA, Brazil's largest producer of soccer

balls, footwear and apparel, recently secured a five-year

distribution agreement in Argentina, after closing its local

subsidiary in 2023 amid raw material shortages and currency

restrictions.

Chairman Roberto Estefano said the firm may fully return to

Argentina within a few years.

"Argentina is an impressive country with about 44 million

people who are passionate about sports," he said, adding that

Cambuci would like to re-enter the market ahead of major rivals.

Eduardo Kunst, CEO of Brazilian chemical manufacturer

Artecola, which in 2023 suspended production in Argentina amid

soaring operational costs but still sells in the market, said if

the country's trajectory continues, the company may consider

resuming local manufacturing.

"We believe that if Argentina continues on its current path,

it can regain its significant role in the region," Kunst said.