MEXICO CITY — Mergers and acquisitions in Latin America’s fashion retail sector will gain steam this year as a soaring dollar and flagging economies fuel interest in highly discounted yet attractive long-term assets, bankers and analysts said.

There were 57 retail deals in Latin America last year worth a total of $2.5 billion, which was down sharply from the 64 transactions worth $4.1 billion in 2014, according to Thomson Reuters data. Bankers expect activity to increase by 10 percent to 20 percent this year.

“Thousands of companies are much more interesting to invest in now,” said Christian Papayanopulos, a partner at Ventura Capital, which bought a $2 million stake in Mexican designer Lorena Saravia in 2014. He added that foreign and local investment funds are eyeing retail bargains to profit from strong long-term growth in Latin America’s second-biggest economy.

The high-flying dollar will depress target firms’ near-term revenues but investors should get a good return on investment within five years, Papayanopulos said.

In his view, cash-rich Grupo Axo, which licenses foreign brands like Tommy Hilfiger and Abercrombie & Fitch, could pursue acquisitions, while foreign retailers could also swoop into Mexico.

“The Mexican [fashion retail] market is not as developed as the U.S. There are many good potential deals,” Papayanopulos said, adding that several designer labels, struggling to procure funds to expand, could also make good targets.

The market is already buzzing about a slew of potential deals, notably Wal-Mart’s planned sale of ailing apparel unit Suburbia, with Coppel seen as the most likely buyer, for around $1.5 billion and Liverpool’s purported interest in taking over Chilean department-store network Ripley, which analysts see happening in coming months.

UBM’s acquisition of Intermoda Fashion Group, which sources say is stalled over price, could still be in the cards after UBM bid for the struggling textile fair organizer last July.

The New Year already saw several megadeals, with hypermarket chain Soriana completing its $1.9 billion takeover of rival Comercial Mexicana. Soriana will merge its private label Basic Concepts, Bisset and sportswear brand Break Out with Comercial Mexicana’s Aca Joe and Cherokee trademarks.

Analyst Luis Willard agreed that Grupo Axo could be on the hunt for deals this year, partly as a result of the pressure it is under to diversify its business from Alsea, the highly acquisitive retail group that owns 25 percent of Axo.

“Axo is well poised to do M&A, especially with Alsea as an adviser,” Willard said.

Top Mexican department stores Liverpool, El Palacio de Hierro and Coppel could also become targets as the dollar continues to gain against the peso, recently hovering as high as $20 compared to about $10 in 2014.

“It’s possible but it would be difficult as these are largely family owned enterprises that won’t sell easily,” Papayanopulos said of the three chains that effectively control Mexican clothing retail.

Brazil is also on the radar of M&A players as its deep recession and growing political turmoil draw opportunistic investors willing to sit out the storm. “There is a lot of interest from strategic investors and buyout firms looking for long-term investments,” said Enrico Carbone at M&A boutique BR Partners. “These guys are not concerned about economic or currency fluctuations or short-term returns.”

Carbone expects financiers to snap up discounted assets of hard-hit Brazilian retailers struggling with the consumer downturn and soaring borrowing rates, which are now more than 20 percent.

Meanwhile, BTG Pactual, a large bank ensnared in the government’s Petrobras corruption scandal, is expected to sell an undisclosed stake in department store chain Leader for $75 million. BTG could also unload stakes in apparel-focused department stores Marissa and Renner to boost its balance sheet and investor confidence following founding investor Andre Esteves’ arrest, Carbone said.

Alpargatas, which owns the trendy Havaianas flip-flop and Osklen fashion brands, could do deals following its sale of a 44 percent stake to J&F last November for $716 million.

“Alpargatas is doing much better than other retailers in Brazil and after J&F’s acquisition, they have the financial muscle to do more deals,” said an analyst in São Paulo, who requested anonymity. “I can see them buying struggling rivals.”

Hypermarket and supermarket chains such as Pau de Azucar or Cencosud could buy smaller regional chains to scale up their businesses, analysts added.

According to Carbone, Brazilian investor Carlos Roberto Wizard could be active after buying Alpargatas’ Topper and Rainha brands last fall. “He is sitting on a large cash pile and wants to make acquisitions in the consumer space,” Carbone said.

Even large beauty firms, such as direct-seller Natura, could hit investors’ sweet spot as the Brazilian real continues to slump against the dollar.

“Natura is a very strong brand so I don’t see why big players like L’Oréal or Estée Lauder wouldn’t be interested,” Carbone added. “Still, this is a very big company so it would command a strong premium.”

Underscoring interest from overseas groups in Brazilian beauty firms, Coty bought Hypermarcas’ beauty-care arm for $1 billion last November to muscle into one of the world’s largest markets.

In Chile, all eyes are on Liverpool’s possible purchase of a 50 percent stake in Ripley, which is unwinding its Colombian operations to boost its fortunes and lift its declining valuation. Liverpool is Ripley’s strongest suitor because “they have expressed an interest in growing in South America and Ripley has good assets and locations in Chile,” said GHG broker analyst Felipe Sanchez. “Their problem is bad management.”

Falling copper and commodity prices are stalling the Chilean economy and squeezing specialized retailers, and Sanchez expects these firms might seek consolidation to reap economies of scale. Department store Almacenes Paris and supermarket giant Cencosud are seen making buys to hedge against their declining valuations, Sanchez said, adding that fashion retailer Tricot could be a top target.

Colombia’s deteriorating economy and falling peso could also spur consolidation.

“Valuations are coming down significantly, making the market attractive for long-term investors,” said Oscar Torres, director at M&A boutique GBS Nogal, adding that large-eats-small deals will rule the roost, with Cencosud’s Jumbo and other hypermarket/supermarket operators looking to buy regional chains to gain further scale. But Exito, which clinched stakes in Pãu de Açúcar and Argentina’s Libertad last year to muscle into South America, is digesting those deals and is unlikely to make future acquisitions in the near term, Torres said.