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Overview of the Brazilian Private Equity and
Venture Capital Industry
Prof. Cláudio Vilar Furtado
GVcepe – Private Equity and Venture
Capital Research Center at FGV – EAESP
Graduate School of Business
ABVCAP Conference: Brazil Post-Crisis, even better!
April 12 /13, 2010 – Sofitel – Rio de Janeiro
Special Thanks to our
Sponsors and Partners
Founding Members
Institutional Sponsorship
Strategic and Institutional
Partnerships
Research Structured in 3 Modules:
Managers
$
Investors
$
Inv. Vehicles
Portf. Companies
PE&VC 2010 Census
Research Structured in 3 Modules:
Managers
• Managers: profile,
investment thesis and legal
nature and human resources
• Investments Vehicles:
Fundraising, LP’s and
$
Investments and Exits
Investors
•Invested companies:
Stage, Sector, Location,
Size, Turnover, Employment,
etc.
$
RESEARCH
MODULEPortf.
1
Inv. Vehicles
Companies
PE&VC 2010 Census
PE&VC in Brazil – Dec/2009
Investors
Managing
Organizations
US$ 34 bn
Committed Capital
140 PE&VC Firms
236 Investment Vehicles
1,747 Professionals and Staff
554 Portfolio Companies
Portfolio
Companies
From 2005 to 2009:
• 489 new/follow-on investments
• 37 backed IPO’s (R$31.3bn)
Research Universe
78%
of the industry
surveyed
180
PE&VC
Managing
Organizations
140
surveyed
Increasing Presence of Global Players
Global, Regional and Emerging Markets
Investment Vehicles
DLJ
Actis
Autonomy
Spinnaker
Global, Regional and Emerging
Markets Fund Managers with
vehicles strictly dedicated to Brazil
AIG Private Equity (EUA)
Darby Overseas (EUA)
Electra Capital Partners (Cayman)
Franklin Templeton (EUA)
AAI Global
Advent
AIG
Cartesian
Cartica Capital
Darby Overseas
Econergy Brasil
General Atlantic
Intel Capital
One Equity Partners
Paul Capital
The Carlyle Group
Intel Capital (EUA)
Itacaré (Ilh Vir)
Santander (ESP)
Standard Bank (SAF)
The Carlyle Group (EUA)
Vita Bioenergia (SUI)
GP Investments
Southern Cross
Committed Capital Allocated to Brazil
40
current US$ bn
21%
35
30
34
32
28
increase: 2009/2008
29
30
28
28
24
25
22
20
15
13
10
5
8
4
5
5
5
5
2000
2001
2002
2003
6
0
1999
2004
2005
2006
2007 mar/08 jun/08 sep/08 dec/08 mar/09 jun/09 sep/09 dec/09
NOTE: Allocated committed capital excludes fully divested vehicles and includes REAL appreciation effect on dec/08 base.
Significant Expansion of the
PE Asset Class in Brazil
Committed Capital as % of GDP
2.2%
2x
1.7%
1.7%
since 2004
1.2%
0.9%
0.9%
2001
2002
0.8%
0.9%
1.0%
0.9%
2004
2005
0.6%
1999
2000
Source: BACEN, GVcepe
2003
2006
2007
2008
2009
Fundraising 2009 US$ 4.6bn: Domestic
R$ 3.3bn (US$1.7bn) and Foreign US$ 2.9bn
30
current US$ bn
24.2
25
20
15
9.9
10
7.2
5.3
4.8
4.6
5
3.6
2.8
2.3
n/a
3.5
n/a
0
2005
2006
2007
Fundraising
2008
Investments
2009
Total
Broad Diversification of Investor Base, notably
Pension Funds, Parent Orgs., GPs, Family Offices, etc.
Parent
Organizations
16%
Others
2%
Pension Funds
22%
Funds of Funds
6%
Private Companies
4%
Family Offices
9%
Banks
10%
Multilateral Institutions
1%
Partners of the
PE&VC organization
11%
Government and stateInsurance Companies
owned companies
2%
3%
Investment Funds
7%
Trusts and
Endownments
7%
Origin of Investors as % of Committed Capital 2009:
high concentration in Brazil, U.S. and E.U
ASIA OTHER LATIN AMERICA
MIDDLE EAST 1.21%
0.44%
2.43%
1.07%
ENGLAND
1.84%
EUROPE
6.93%
USA
25.58%
BRAZIL
60.49%
Sample: 255 reporting vehicles, ¾ of Committed Capital
Increasing Span of GP activity into both
Private Equity and Venture Capital
Distribution of Investment Vehicles by Type
Mezanino
3%
Greenfield
1%
PIPE
7%
Venture Capital
23%
More than one
38%
Private Equity
28%
Obs: Venture Capital includes Seed, Early Stage and Later Stage VC. Private Equity includes Growth Capital and Later Stage
Sample: 224 vehicles, 88% of population
Strong Expansion of Portfolio Companies,
predominantly SMEs
600
14%
Nr. of Portfolio Companies
p.a.
CAGR 2005-2009
500
400
300
554
480
200
392
283
323
100
0
2005
2006
2007
2008
2009
Portfolio Companies 2009 by Sector of Economic Activity
Industry
1.
Innovative and
Technology based
sectors predominate
2.
Spread in Traditional
industries
IT and Electronics
Energy and Oil
Civil Construction
Communications
Retail
Agribusiness
Food and Beverages
Transportation and Logistics Services
Pharmaceuticals, Medical and Aesthetics
Financial Services
Biotechnology
Infrastructure
Education
Entertainment/Tourism
Services (Other)
Real Estate
Metallurgy, Mechanical and Electrical Material Industries
Extractive Industries
Chemical Industries
Other Industrial and Services
Unidentified Sector
TOTAL
2009
Nr.
108
54
52
34
28
25
21
21
20
18
15
15
13
11
11
9
7
6
3
51
32
554
%
19,5
9,7
9,4
6,1
5,1
4,5
3,8
3,8
3,6
3,2
2,7
2,7
2,3
2,0
2,0
1,6
1,3
1,1
0,5
9,2
5,8
100%
Private Equity and Venture Capital Investment Activity leverages Industrial
Development Policy: presence in 90% of priority government programs
PE & VC PORTFOLIO COMPANIES IN 24/26 SECTORS
4/6
Mobilizers programs in strategic areas
Complexo
Industrial Complex
Industrial
Health da
Saúde
Tecnologias
Technologyde
Information
Informaçãoand
e
Communication
Comunicação
Nuclear
Energy
Industrial
Complex
Defense
Nanotecnologia
Nanotechnology
Programs to consolidate and expand the leadership
Complexo
Complex
Aeronáutico
Aeronautical
Petróleo,
Oil,
Natural
Gás natural
gas and
ePetrochemicals
Petroquímica
Bioethanol
Bioetanol
Mineração
Mining
Steel
Pulp and Paper
Industry
Naval and Cabotage
Capital goods
Textile and
Clothing
Leather, Footwear and
Artifacts
Madeira
and Mobile
Agroindústrias
Agribusiness
Source: GVcepe and ABDI - Productive Development Policy (PDP)
Hygiene,
Higiene,
Perfumaria
Perfumery
and
e Cosméticos
Cosmetics
Biodiesel
Biodiesel
7/7
Meat
13/13
Programs to strengthen the competitiveness
Complex
Automotive
Biotecnologia
Biotechnology
Construção
Building Civil
Plastics
Complexo
Complexde
Serviços
Services
Education and
OUTROS
OTHERS
Brazilian PE&VC on the Radar Screen of Global Investors
Global Fundraising (US$bn)*
Region
2005
2006
North America
187
315
Europe
110
136
Asia and ROW
47
Global
2008
2009
Total
366
144
1,397
162
157
73
640
84
100
112
27
371
345
535
646
636
246
2,408
Brazil**
2.3
5.3
7.2
4.6
4,6
24
as % of Asia and ROW
4,8%
6,4%
7,2%
4,1% 17,6%
*Preqin
**GVcepe
2007
383
6,5%
Brazilian PE&VC on the Radar Screen of Global
Investors: Employment
Country
US
UK
France
Brazil (GVcepe correction)
Germany
Australia
Canada
Japan
India
Hong Kong
Switzerland
China (ex. Hong Kong)
Italy
Sweden
Israel
Netherlands
Other
Total
Source: Preqin, Gvcepe
Estimated Total Employment
38.500
7.700
2.300
1.700
1.500
1.400
1.400
1.100
1.000
900
900
800
800
800
600
600
8.800
69.100
Research
Structured •GP:
in 3Legal
Modules:
• Legal structure and LP
structure and
agreements
remuneration
• Investors an LPs: resources
origin and category
• Performance by
Investment Vehicle
Vintage, Exits, etc.
Managers
RESEARCH MODULE 2
$
Investors
$
Inv. Vehicles
Portf. Companies
PE&VC 2010 Census
Research
Structured
in 3 Modules:
• Growth and value
creation,
jobs and intangibles
• Patents and Innovation
•Social and Enviromental
Sustainability
•Exits and Capital Markets
• Corporate governance and
Impact
financial contractsManagers
RESEARCH MODULE 3
$
Investors
$
Inv. Vehicles
Portf. Companies
PE&VC 2010 Census
Your cooperation is crucial to
our joint success!!!
Thank you
Prof. Cláudio Vilar Furtado
GVcepe – Private Equity and Venture
Capital Research Center at FGV – EAESP
Graduate School of Business
ABVCAP Conference: Brazil Post-Crisis, even better!
April 12 /13, 2010 – Sofitel – Rio de Janeiro