BRAZIL: An Introduction to Corporate/M&A: Highly Regarded

Brazil’s Path Forward: Energy, Digital Infrastructure and the 2026 M&A Outlook

2025 performance – strong foreign investment; resilient M&A activity

Despite initial subdued forecasts, Brazil has managed to attract the attention from strategic buyers, investors and private equity funds throughout 2025. These participants have contributed to what could be a record-breaking inflow of foreign direct investment, according to data from the Brazilian Central Bank, which has tracked foreign investment since the 1990s.

This robust investment environment was underpinned by strong macroeconomic performance. At the time of writing this article, Brazil is on its way to close 2025 with stable GDP growth, a low unemployment rate, strengthening domestic demand, and gradual progress in fiscal policy discussions. Targeted tax incentives have supported the expansion of priority industries, while clearer regulatory guidance has bolstered investor confidence. Together, these factors have enhanced the market’s resilience to both internal political challenges and external shocks and haves fostered the emergence of a more diverse transaction environment, encompassing joint ventures, hybrid financing instruments, corporate restructuring and consolidation activities.

At the same time, structural themes, such as the clean-energy transition, digitalisation, tax reforms and industrial modernisation, have gained increasing prominence in Brazil’s policy agenda. Hosting COP30 further elevated these priorities on the international stage, providing additional momentum for related policies. Additionally, Brazil has developed game-changing negotiations with relevant international partners, including the EU-Mercosur Agreement and, more recently, discussions with the United States over tariffs on several products. As a result, despite political noise and government budget challenges, Brazil enters 2026 with a level of economic resilience and transactional maturity that distinguishes it from other major emerging markets, fostered by multinational groups and world-class local players from several industries.

Reflecting this favourable backdrop, M&A activity in 2025 remained relevant. The country sustained a solid flow of both domestic and inbound transactions, driven by long-term industrial policies, favourable demographics, and growing demand for digital and energy infrastructure. According to PwC, up to September 2025, 884 transactions involving domestic buyers and 203 transactions involving foreign acquirers had closed in Brazil. The telecommunications, media, and technology sectors accounted for 453 of these deals, reaffirming their central role in Brazil’s dealmaking landscape.

2026 outlook: leading sectors; deal trends

In 2026, Brazil is well positioned to continue attracting international attention, driven by a combination of structural strengths. These include a potential decrease in interest rates within the fiscal year, a predominantly renewable energy matrix, a strong fingerprint of agribusiness, a large and increasingly digital consumer base and an evolving innovation ecosystem. While operating conditions remain complex, experienced investors have relied on deep local knowledge to navigate the market effectively and generate long-term value.

Some sectors that were particularly active in 2025 are also expected to remain active in 2026.

• Energy: transmission auctions, generation projects and the expected liberalisation of the retail electricity market have attracted utilities, infrastructure funds and strategic investors.
• Automotive, batteries and mobility: the automotive industry is undergoing a global structural change, with investment in electric vehicles, battery manufacturing and new production capacity. Federal and state incentives have helped position Brazil as a potential hub for next-generation mobility.
• Technology and software:consolidation in the sector remains strong, as SaaS companies, AIplatforms and cybersecurity providers pursue scale, vertical integration and portfolio expansion.
• Data centres and cloud infrastructure: the REDATA regime has strengthened Brazil’s positioning as a regional digital infrastructure hub. Hyperscalers and specialised investors have expanded operations, supported by tax incentives, renewable energy availability and clearer rules for the export of digital services. In the coming years, Brazil aims to position itself as a regional leader in data processing, taking advantage of its electrical infrastructure and legal stability.

Deal activity in Brazil has increasingly been characterised by sophisticated structures, deeper due diligence, and long-term planning. Despite global macroeconomic pressures, the market has demonstrated resilience and remains attractive to international capital. This trend is expected to continue in 2026, aligning with the interests of foreign investors seeking stable, well-structured opportunities in an increasingly volatile global environment.

2026 outlook: regulatory developments reinforcing investor confidence

Regulatory clarity has long been both a priority and a concern for international investors. Recent developments in the country have contributed to a more predictable and competitive environment, particularly in the energy transition and digital transformation sectors.

In the digital transformation sector, a key milestone was the introduction of REDATA, a special regime for data centres, which offers tax incentives for the importation of equipment, simplified compliance mechanisms and clearer environmental requirements. The regime’s framework integrates tax, energy and sustainability considerations. Such clear and practical rules increase Brazil’s attractiveness as a destination for data centre investments.

In the energy sector, the planned liberalisation of the retail electricity market by 2028 represents a major structural reform. The transition is expected to expand consumer access to the free market, stimulate competition and promote consolidation among retailers and generators. This estimated expansion, coupled with Brazil’s growing renewable energy base and transmission network, reinforces investor interest.

In the energy transition area, federal and state initiatives supporting industrial decarbonisation and electric mobility have also strengthened Brazil’s positioning. Incentives directed at manufacturers of vehicles, batteries, semiconductors and clean technology components have attracted global players and facilitated capacity expansion, and are expected to gain further momentum as such incentives are promoted and consolidated.

2026 in short: positive momentum and structural opportunities

Regulatory advances, improved business conditions and a considerable pipeline of structural investments support expectations of another year of strategic, long-term-oriented deal activity for Brazil.

Demand for digital infrastructure is expected to intensify, driven by the expansion of data centers, cloud services, AI applications and broader data consumption. REDATA, combined with Brazil’s competitive renewable energy profile, shall continue to attract global technology and infrastructure investors.

In the energy sector, anticipated liberalisation of the retail market is likely to prompt early transactions, including reorganisations and consolidation among retailers, generators and renewable developers. Brazil’s leadership in wind, solar and biomass projects, together with a consistent schedule of transmission auctions, reinforces its position as a key clean energy investment market.

The COP30 summit both consolidates and highlights Brazil’s leading role in clean energy. Commitments to advance low-carbon industrial policy, expand renewable generation and accelerate the transition away from fossil fuels have increased expectations of a more climate-aligned regulatory environment. Announcements during the conference, including the call for a co-ordinated fossil fuel reduction roadmap and the appointment of an automotive industry climate champion, signal that both government and industry intend to support the adoption of cleaner technologies. For the M&A market, these developments are expected to drive demand for renewable energy assets, transmission infrastructure, electric mobility platforms and bioeconomy-related businesses. As a result, sustainability-driven transactions are likely to play a more prominent role in Brazil’s 2026 deal pipeline.

Industrial realignment is also expected to create opportunities. Mobility, advanced manufacturing and semiconductor supply chains are undergoing global repositioning, and Brazil is ready to capture part of this cycle through fiscal incentives and localisation strategies.

Brazil enters 2026 having demonstrated an ability to convert volatility into opportunity. Presidential election results can speed up this process. In any case, strong sector fundamentals, ongoing reforms and a more predictable regulatory environment shall continue to position the country as one of the most attractive M&A jurisdictions among emerging markets.