Private Equity and Venture Capital in Brazil - BVCA admin

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III. Challenges and opportunities: highly volatile asset prices Globalization caused foreign capital flows to gradually command the prices of liquid Brazilian assets. The prominence of short term, unstable portfolio investment entails high volatility of asset prices. Opportunity: asset volatility is much higher than it should be as long as economic fundamentals are concerned Opportunity: anti-cyclical behavior pays off handsomely 60 55 50 45 40 35 30 22549-d-092308 Bullish tone divestment + capital raising Sour sentiment capital deployment 2000 Net fiscal debt and external indebtedness % of GDP % of GDP 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Public debt (left) Foreign debt (right) Source: Banco Central do Brasil. 2011 35 30 25 20 15 10 5 0 -5 90 75 60 45 30 15 0 -15 Brazil: net FDI and foreign portfolio investment 2000 US$ Billion 12-m US$ Billion 12-m 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Short term portfolio Long term FDI Source: Banco Central do Brasil. 4.00 3.50 3.00 2.50 2.00 1.50 1.00 Source: Banco Central do Brasil and Patria Investimentos. 2011 Nominal exchange rate x currency volatility 2000 R$ per US$ % change 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Avg.FX 00Q1 = R$1.77 per US$ Avg.FX 11Q3 = R$1.64 per US$ Nominal FX (left) FX changes (right) 90 75 60 45 30 15 0 -15 20 15 10 5 0 -5 -10 -15 -20 32
22549-d-092308 IV. Foreign environment: foe or friend? Slower global growth negatively affects Brazil through two main channels: I. Trade balance (relevance = low) Gross exports account for a bit more than 10% of GDP Terms of trade for Brazil have been improving and surging FDI more than compensates for less vibrant exports II. Investment spending (relevance = moderate) Brazil’s aggregated CAPEX is quite volatile Adverse foreign shocks dent business confidence, leading to reduced investment spending and slower job creation There is a third channel of transmission of foreign shocks that may be activated in the case of global meltdown: III. Consumer purchasing power (relevance = high) The unleveraged expansion of Brazil’s domestic consumption market highlights the importance of real disposable income Adverse foreign shocks significantly affect activity if they erode real disposable income over the longer term Chain reaction: sharp currency depreciation higher inflation lower disposable income weaker growth Most likely scenario: global jitters entail deceleration of Brazil’s real GDP growth to 3-4% in 2011-12. 90 75 60 45 30 15 0 Brazil: net FDI and terms of trade Source: Banco Central do Brasil. 28 24 20 16 12 8 4 0 -4 -8 -12 2000 2000 US$ Billion 12-m 2001 Investment spending x MSCI stock index 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 % 12-m change % 12-m change 2006 2007 2007 2008 2008 2009 2010 Total CAPEX (left) MSCI Brazil (right) US$ Billion 12-m 2009 Source: Banco Central do Brasil and Patria Investimentos. 2010 Long term FDI (left) Trade balance (right) 2011 2011 100 75 50 25 0 0 -25 -50 60 50 40 30 20 10 -10 33
Page 1 and 2: In partnership with Private Equity
Page 3 and 4: In partnership with In association
Page 5 and 6: Sidney Chameh, Chairman, ABVCAP pre
Page 7 and 8: A Brief Macro Overview 30.0% 25.0%
Page 9 and 10: Opportunities Growth: Brazil is now
Page 11 and 12: Brazil PE/VC in Numbers Fundraising
Page 13 and 14: Private Equity Funds (FIPs) Most us
Page 15 and 16: Priorities Advocacy & Institutional
Page 17 and 18: ABVCAP Data Benefits: Data accuracy
Page 19 and 20: Thank you! Sidney Chameh Chairman,
Page 21 and 22: International Series Brazil Secular
Page 23 and 24: 22549-d-092308 Important Notice Any
Page 25 and 26: I. The widening growth gap between
Page 27 and 28: II. Brazil: domestic market oriente
Page 29 and 30: 9 6 3 0 -3 -6 -9 -12 -15 22549-d-09
Page 31: III. Challenges and opportunities:
Page 37 and 38: International Series Brazil Advanta
Page 39 and 40: In partnership with Coffee and Netw
Page 41 and 42: International Series Brazil The Reg
Page 43 and 44: THE ROLE OF BRAZILIAN LEGISLATION I
Page 45 and 46: Foreign Investment ▪ EQUAL TREATM
Page 47 and 48: Regulated - Vehicles Foreign Countr
Page 49 and 50: PE / VC FUNDS ▪ CLOSED END INVEST
Page 51 and 52: PE / VC FUNDS - PORTFOLIO SHARES DE
Page 54 and 55: Brazil: International Fund Structur
Page 56 and 57: FIPs • Closed-end investment fund
Page 58 and 59: FIP/Offshore Fund Structure Non-FIP
Page 60 and 61: Currency/Inflation Issues • Curre
Page 64 and 65: LPs’ views of the Brazilian PE/VC
Page 66 and 67: 90 80 70 60 50 40 30 20 10 0 Source
Page 68 and 69: 70 60 50 40 30 20 10 0 Brazilian PE
Page 70 and 71: 70 60 50 40 30 20 10 0 Percentage o
Page 72 and 73: 35 30 25 20 15 10 5 0 Plans for EM/
Page 74 and 75: 30 25 20 15 10 5 0 Source: ABVCAP/B
Page 76 and 77: 80 70 60 50 40 30 20 10 0 Percentag
Page 78 and 79: 60 50 40 30 20 10 0 Source: ABVCAP/
Page 80 and 81: 80 70 60 50 40 30 20 10 0 Percentag
Page 82 and 83:
Thank you 82
Page 84 and 85:
International Series Brazil The LP
Page 86:
International Series Brazil Closing
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