by Brian DeChesare Comments (6)

Corporate Development in Latin America: The Best Way to Profit from Infrastructure Development in the Amazon?

Corporate Development Latin America

If developed markets aren’t doing so well, does it make sense to move to an emerging or frontier market to find work?

And if you do make the leap, can you ever return home, or are you stuck there forever?

We get questions like this all the time, so I recently spoke with a reader who worked in corporate strategy, corporate development, and corporate finance in Latin America to get his take:

Breaking in Through the Amazonian Side Door

Q: Can you summarize your story for us?

A: Sure. I studied engineering at university but quickly lost interest after I completed a few unengaging internships.

I decided finance was more interesting, but it was too late to change my major, so I pursued a Master’s in Finance degree in Europe to make the change. As part of the program, I went to Peru to complete work for my Master’s Thesis.

I graduated into a recession, and, while I won a few finance-related offers, nothing excited me, so I decided to entertain job offers I was getting in the booming Peruvian economy.

While I was born and raised in the U.S., I knew the language and culture of Peru, and I had family and connections in the area.

I ultimately accepted a role in corporate development at a construction/engineering company there.

On the job, I analyzed infrastructure projects and helped the company make investment decisions for assets like toll roads, power plants, and treatment plants.

The role was very open-ended, so I ended up working on infrastructure deals, acquisitions large and small, and even on the company’s U.S.-listed IPO.

While working on the IPO, I met a lot of investment bankers, became interested in IB, and switched into a corporate finance/corporate banking role.

Then, I went back to the U.S., completed an MBA at a top school, and won an investment banking offer at a bulge-bracket bank.

Q: That is quite a story.

To start with, what are domestic firms in Peru, or Latin America in general, looking for in candidates for corporate development roles?

A: When I first joined, the process was highly unstructured, and winning interviews was all about networking.

They wanted someone who knew about finance and who had attended well-known schools, and it was incredibly important to have connections, such as family in the country.

Unlike corporate development roles in developed countries, they didn’t have a strict pre-requisite such as 2-3 years of investment banking or consulting experience.

However, as in other countries in Latin America, extended internships of 6-12 months are quite common.

If you’re interviewing as a current student or recent graduate, you’ll probably complete such an internship before you receive a full-time offer there.

Q: And I assume it’s not common to hire foreigners.

A: It’s very rare, or at least it was when I joined.

They heavily favor local candidates, to the point where they’ll eliminate foreigners for personal, non-work-related reasons.

For example, I once saw a European candidate interview for a senior position, make it to the final round, and then lose the offer because management was afraid he might quit and leave the country should he break up with his significant other!

You could say they care a lot about “roots” in the area.

You might not get this treatment at international companies, but these obstacles are very common at domestic firms.

You obviously need to know Spanish to work in these countries (or Portuguese for Brazil), but you don’t necessarily need to be perfect; I improved a lot after working there for a few years.

Knowing English is a huge asset since many financing documents are in English and many loans are issued under New York law – but sometimes companies don’t value language skills as highly as you might think.

Q: Do these differences extend to interviews as well? What should you expect?

A: Yes, the questions are more personal.

Interviews tend to be less structured and have fewer technical questions; they’re more likely to assess you by asking, “Who do you know in this country?” or “What social circles are you in?”

The finance industry is very small in most Latin American countries, and everyone knows each other, so there’s a lot of “keeping up with the Joneses.”

They won’t you ask you isolated technical questions, such as how Depreciation affects the statements or how WACC changes under specific conditions, but they will ask higher-level questions about corporate scenarios.

For example, they might ask you about a specific company and whether a debt or equity financing makes the most sense.

To answer that question, you have to explain how both options would change the company’s statements, how its credit stats and ratios would be affected, and how you might use the numbers to decide on the best option.

If you forget to mention one of those points, they might conclude that your technical skills are weak.

On the Job in Peru

Q: Thanks for explaining that.

You mentioned the specific projects you worked on at the first company, but what were your overall impressions of the job?

A: Besides the randomness of the role – going from acquisition analysis to Project Finance to analyzing a potential merger with a bigger company to an IPO – my main impressions were:

  • “Relationship Management” is Huge – We had nine subsidiaries, and I spent a lot of time communicating with the CEO and CFO of each one on M&A and investment plans, as well as during the IPO process. You do this even in developed markets, but there is more emphasis on it in Latin America. You have to be not only technically astute, but also adept at having efficient conversations to earn their respect.
  • You Have to Be a Self-Starter – Training is non-existent, and I won many of my opportunities by teaching myself how to model.

Q: Are those the main reasons you left the corporate development role for corporate finance/banking instead?

A: Those were actually things that I came to appreciate, as I think they are invaluable skills going forward.

I left mostly because I wanted to gain more structured, relevant deal experience, get a brand name with international recognition, and prepare myself to move into IB.

The corporate banking job (the next one I moved into) gave me more relevant experience, but other issues came up: For example, we spent around 80% of our time on reviewing and negotiating agreements, but only 20% on the financial analysis.

Domestic clients seeking to access low interest rates under New York Law loans often knew nothing about key concepts in the U.S., such as “Market Disruption Event” clauses (i.e., when an event happens such that LIBOR no longer reflects the bank’s true cost of funding, and the base variable rate has to be adjusted accordingly).

So, we also spent a lot of time educating clients on the international norms of the debt financing process.

The analysis can be light, and we often spent more time scrutinizing documents and agreements and suggesting changes to minimize risk.

Even fairly simple points – like assessing whether or not a company owned certain assets that they planned to use as collateral – sometimes took huge amounts of time because we had to sort through so many documents to verify the facts.

The best part of the job was that the Peruvian market is relatively small, and the four main banks there (Banco de Crédito del Perú, BBVA Continental, Scotiabank Peru, and Banco Internacional del Perú) do most of the debt deals; if you’re at one of them, you will get a lot of exposure.

Q: I see. What about compensation at these firms?

A: That was another major reason I left: It’s far lower than in developed markets.

I initially earned the equivalent of $25K USD per year in my corporate development role at the Peruvian company.

That’s a lot for a country like Peru (several times the average middle-class salary), but it’s still a steep discount to compensation in developed countries.

In my corporate finance/banking role, I earned around $75K USD per year, which was still a discount to pay in developed markets, but not quite as bad.

And there’s still a big discount even with post-MBA compensation: A post-MBA Associate there might earn $100K – $120K USD total, which is about half of what one in the U.S. might earn in a comparable role.

(NOTE: Compensation figures as of 2016/2017.)

Looking Back on Latin America

Q: Thanks for providing those figures.

We’ve discussed Peru, but how different are the other countries in Latin America?

A: I focused on the Andean region, so I can only speak to those countries (i.e., I’m not sure about Brazil or Mexico).

Of those, Chile is the most developed country and the only one in Latin America with an “A”-zone credit rating according to all three rating agencies.

Banks there are more similar to international banks, though the markets are still less sophisticated.

Countries such as Colombia, Ecuador, and Bolivia are more similar to Peru: Significant differences compared with developed markets, and lower pay.

Q: Does it make sense to do what you did and go to an emerging or frontier market to gain work experience, do an MBA, and then get into IB in the U.S. or Europe?

A: It depends on your goals. If you work in a country like Peru, it tends to be very difficult to return home because firms will “discount” your experience.

So, if you stay there too long (e.g., 5-10 years), you will take a professional hit if you use my strategy to gain experience and then move back home.

If you want to make investment banking or private equity your long-term career, it’s still better to start out in a developed market and gain experience there if you can do so.

But if the job market is poor, or you became interested at the last minute, the “emerging/frontier market strategy” might make sense.

If you’re only interested in doing banking for 2-3 years to save up money, it might also make sense to work in an emerging market – you might end up saving more due to the lower taxes and cost of living.

Also, if you like an unstructured environment where you’re always working on different tasks and where your role changes over time, emerging markets could make sense.

Q: Great, thanks for sharing your thoughts on all of that.

And good luck with your new investment banking role!

A: Sure thing. Thank you!

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Hi! I’m from Perú and I find this article very useful. I’ve worked in infraestructure and real estate development and I’m really interested in getting into corporate finance roles. I heard a lot about the local preference for internships and full time jobs, however I was interested in what does the PE companies think of local graduate programs?

    1. Thanks. I don’t think there is a lot of PE activity outside of Brazil and Mexico, and in both those countries, they tend to recruit bankers. You might be able to get into the industry from a local graduate program, but you would have a better chance if you had a Master’s degree from a top university in Europe or the U.S. on your resume.

  2. Hi Brian, Nicole and Nicola,

    I have left a previous message on another post roughly a week ago regarding doing some admin work at an IB/PE/HF/AM firms, however, I have been offered a place as research and admin at a Tech Software start-up in London. I haven’t yet heard from my recruiter about any IB/HF/PE roles yet. I have already said I would rather wait for the latter roles to come before considering other roles. Rather than waiting and not getting any work (worthwhile for IB/PE/HF) should I work for the Tech Software Start-up instead for the time being?


  3. Hi Brian

    How difficult it is to transfer between divisions within a bank?

    For example assume I have an internship at bulge bracket – M&A and want to apply for graduate role within same or even different banks for sales and trading or equity research or wealth management due to much better working hours and same pay. Do you think it is possible?

    I think I can easily get into M&A and IB internship as I’ve got very relevant experiences (corp. finance, Private equity, valuations, capital raising etc), but being from a non target uni I doubt I would get into other divisions for the summer internship-no relevant experience. Long term don’t wanna do ib

    1. It is possible but not that easy. It’s more feasible to do this if you have an extended internship for 6-12 months and have more time to prove yourself and get to know other groups. It’s tougher to do for 3-month internships. But you can always reach out to other teams to get the process started (focus on one to maximize your chances… not a great idea to apply to all those different divisions at once).

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