censo fgvcepe

The Second Census of theBrazilian Private Equity and

Venture Capital Industry

GVcepePrivate Equity and Venture Capital Research Center at FGV-EAESP

Prof. Cláudio V. Furtado

December 2010

Copyright © 2010. Fundação Getulio Vargas - GVcepe.

Disclaimer

This presentation has been prepared with the sole purpose of providing

certain information about the Brazilian Private Equity and Venture Capital

Industry to the participants of the “Café com a Indústria” event dated

December 13th, 2010 and will be available for download in the near future

at websites to be further informed by Agência Brasileira de

Desenvolvimento Industrial (ABDI) and Fundação Getúlio Vargas (FGV)

Thanks to our Sponsors and Partners

Founding Members

Institutional Sponsor

Project Sponsor

Strategic Partners


Comprehensive Research

180PE&VC

Managing

Organizations

144Surveyed

80%of the industry

surveyed


Industry Overview as of Dec. 2009

InvestorsUS$ 36.1 bn

Committed Capital

General

Partners

144 PE&VC Firms

258 Investment Vehicles

Estimated 1,593 Professionals

and Staff

Portfolio

Companies

502 Portfolio Companies

From 2005 to 2009:

• 414 new investments

• 137 total exits

• 37 IPOs


4 5 5 5 5 68

13

2729

36

0

5

10

15

20

25

30

35

40

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Committed Capital in US$ bn

Evolution of Committed Capital

NOTE: Committed Capital excludes only fully divested vehicles.

NOTE: US$36.1 bn (2009) Includes US$3.32 bn resulting from R$/US$ exchange rate appreciation on R$ denominated committed capital,

computed in Dec 2008 (exchange rates of R$2.28/US$1.00 and R$1.74/US$1.00 in Dec 2008 and Dec 2009, respectively). All annual

figures were translated at year end nominal exchange rates.

15%p.a.

CAGR 2007-2009

43%p.a.

CAGR 2005-2009


Expansion of the Asset Class

SOURCE: BACEN, GVcepe

0.6%

0.8%0.9%

1.0%

0.9%

1.0%

0.9%

1.2%

2.0%

1.8%

2.3%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Committed Capital as % of GDP

2x since 2004


Limited Partnership

37%

CVM* 26%

Holding 4%

Direct Investment

15%

Corporate Ventures 1%

Other 7%

Committed Capital Breakdown

Public Sector3%

Private Sector Organizations

71%

Public Sector Organizations

8%

Subsidiaries of Financial

Institutions 17%

Corporate Ventures

1%

Committed Capital by PE/VC

Organization CategoryCommitted Capital by Investment

Vehicle’s Legal Structure

* All vehicle structures according to Brazilian PE/VC regulation CVM 391, 209, 402


Committed Capital Breakdown2008 (US$ MM) Private Gov. Total %

Traditional * 23,101 696 23,797 82%

Corporate Venture ** 350 - 350 1%

Infrastructure *** 1,897 - 1,897 7%

Real Estate 2,606 - 2,606 9%

Timber 334 - 334 1%

Total 28,288 696 28,984 100%

2009 (US$ MM) Private Gov. Total %

Traditional * 27,168 935 28,103 78%

Corporate Venture ** 350 - 350 1%

Infrastructure *** 3,955 - 3,955 11%

Real Estate 2,734 - 2,734 8%

Timber 970 - 970 3%

Total 35,177 935 36,112 100%

Dec. 08 (In US$ MM) 28,984

Fundraising (Vehicles in US$) 3,093

Fundraising (Vehicles in R$) 2,979

Reductions (Vehicles in US$) -1,531

Reductions (Vehicles in R$) -732

Exchange Rate Effect 3,318

Dec. 09 (In US$ MM) 36,112

* Investment vehicles with focus on manufacturing, trade, services, agriculture and traditional businesses.

** Subsidiaries of industrial corporations

*** Investment vehicles dedicated exclusively to oil & gas, energy and self defined infrastructure funds.

NOTE: Reductions refer to discontinued operations, termination of funds, allocation to Brazil changes and reductions of committed capital by

investors.


Fundraising 2009

Fundraising 2009 Fund At Cost Allocation* Total %

Traditional 1.763 1.465 740 3.968 65%

- CVM 446 - - 446 7%

- Limited Partnerships 1.317 784 540 2.641 43%

- Holdings & Direct Investment - 682 200 882 15%

Infrastructure 1.469 - - 1.469 24%

- CVM 1.224 - - 1.224 20%

- Others 245 - - 245 4%

Timber 632 3 - 635 10%

- CVM 632 - - 632 10%

- Holdings & Direct Investment - 3 - 3 0%

Total 3.865 1.468 740 6.072 100%

% 64% 24% 12% 100%

NOTE: Direct Investments are those made directly by the PE/VC organization; no fund structure.

* Global and Regional vehicles declaring increase (or decrease) of committed capital allocated to Brazil.


Investment and Fundraising

2.3

5.3

7.2

4.6

6.1

n/a n/a

2.8 3.3 3.1

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

2005 2006 2007 2008 2009

Investment x Fundraising (in US$ bn)

Fundraising

Investing0.3%

0.5%

0.5%

0.3%

0.4%

0.2% 0.2%

0.2%

NOTE: The percentage represents each year’s GDP by either PE/VC committed capital raised or invested in Brazil.

SOURCE: BACEN, GVcepe


Diversified Fund Investor Base

Insurance Companies

1%

Multilateral Institutions

1%Government and Public Institutions

4%

Banks 4%

Private Companies

5%

Others 5%

Funds of Funds 6%

Investment Funds 6%

Family offices 9%

PE/VC Organization

Partners 9%

Trusts and Endowments;

10%

Parent Organization

18%

Pension Funds 22%

NOTE: Parent Organization includes Corporate Ventures and Banks’ captive PE/VC subsidiaries

SCREENING AND DEAL FLOW


Deal Flow Sourcing

PE VC

Own PE/VC Organization 39.0% 37.0%

Incubators/Tech Parks - 5.0%

Startup/BPlan Competitions - 7.0%

Seed/VC Forum FINEP - 5.8%

Business Rounds - 2.3%

Competitors of Portfolio

Companies0.1% 2.7%

Customers/Suppliers of

Porfolio Companies 1.5% 2.7%

Media News5.6% 4.7%

Others44.4% 33%

Total100% 100%

Proprietary

PE VC

Incubators/Tech Parks 0.3% 13.1%

Investors (LPs) 1.9% 10.0%

Other PE/VC Organizations 5.0% 3.8%

Consultants/Auditors/

Advisors/Brokers30.8% 5.4%

Law Firms 4.7% 5.8%

Banks 8.4% -

Portfolio

Companies/Entrepreneurs7.2% 15.8%

Others 44.8% 46.2%

Total 100% 100%

Referrals

INVESTMENTS AND PORTFOLIO COMPANIES


Investments by Stage and Type 2009

41%

31%

15%

5%4%

3% 1%

Private Equity

Venture Capital

Seed/Start-up

Greenfield

PIPE

Distressed

Stage Average Ticket

Seed/Start-up 0.42

Venture Capital 4.41

Greenfield 46.64

Mezzanine 50.22

Distressed 64.37

Private Equity 73.41

PIPE 91.77

Total 39.39

Number of Investments

(Includes New and Follow-on Investments)

Average Ticket by Stage of Company

Development (US$ MM)

Sample of 77 investments (81%)Sample of 95 investments (100%)

Mezzanine


Number of Investments by Sectors of Economic Activity

2005-2008 vs. 2009 (Includes New and Follow-on Investments)

Sample 2005-2008: 394 investments

Sample 2009: 95 investments

* Various Industries: E.g.: Chemicals, Mechanicals, Electric, Metallurgic, Packaging, Textiles.

** Various Services: E.g.: Call Center, Consulting.

1%

3%

8%

9%

11%

14%

18%

1%

2%

2%

3%

4%

4%

4%

4%

5%

6%

6%

7%

8%

11%

15%

15%

Communication

Infrastructure - other

Food and Beverages

Extractive Industries

Education

Civil Construction/Real Estate

Entertainment/Tourism

Financial Services

Retail

Biotechnology

Transportation and Logistics Services

Various Services**

Various Industries*

Agribusiness

Pharmaceutical/Medical/Aesthetics

Energy and Oil

IT and Electronics

2009

2005-2008


Value of Investments by Sectors of Economic Activity

2005 - 2008 (Includes New and Follow-on Investments)

Sample 2005-2008: US$ 6.3 bn: Transportation and Logistics Services, Biotechnology and Various Services represent less than 1% each



1%

2%

2%

3%

3%

3%

4%

4%

4%

11%

12%

13%

14%

24%





IT and Electronics

Agribusiness

Communication

Education

Energy and Oil

Financial Services

Retail


Various Industries*

Food and Beverages


Value of Investments by Sectors of Economic Activity

Sample 2005-2008: US$ 6.3 bn: Transportation and Logistics Services, Biotechnology and Various Services represent less than 1% each



2009 (Includes New and Follow-on Investments)

Sample 2009: of 95 investments (100%) with a total value of US$ 3.1 bn. Communication and Biotechnology represent less than 1% each

1%

1%

2%

2%

4%

6%

7%

8%

11%

14%

39%

1%

1%

1%

1%

3%

5%

5%

6%

9%

10%

54%


IT and Electronics

Various Industries*

Retail

Food and Beverages


Various Services**


Agribusiness

Education




Financial Services

Energy and Oil

Including all investments

Excluding one US$ 0.765bn investment in energy transmission


Portfolio Companies by sector of economic activity 2009

Sector No. of Companies % Cumulative %

IT and Electronics 103 20.5% 20.5%

Civil Construction/Real Estate 69 13.7% 34.3%

Energy and Oil 56 11.2% 45.4%

Various Industries 55 11.0% 56.4%

Communications 33 6.6% 62.9%

Retail 26 5.2% 68.1%

Agribusiness 25 5.0% 73.1%

Transportation and Logistics Services 20 4.0% 77.1%

Food and Beverages 19 3.8% 80.9%

Infrastructure - other 19 3.8% 84.7%

Financial Services 16 3.2% 87.8%

Pharmaceuticals, Medicals and Aesthetics 15 3.0% 90.8%

Biotechnology 14 2.8% 93.6%

Various Services 10 2.0% 95.6%

Education 8 1.6% 97.2%

Entertainment / Tourism 7 1.4% 98.6%

Extractive Industries 7 1.4% 100.0%

Total 502 100.0%

NOTE: The sample contains 502 companies with information about their sector of economic activity in 2009 .




0,2%

1,6%

2,1%

5,0%

6,2%

6,9%

7,6%

13,1%

20,9%

36,5%

Distressed

Greenfield

Mezzanine

VC - Later stage

PIPE

PE - Later Stage

Seed

Start-up

VC - Early Stage

PE - Growth

Frequency of Portfolio Companies by Stage 2009

NOTE: The sample contains 502 companies, of which 436 companies reported information about the stage of the company in 2009 .

2009

VC; 47%

PE Gr; 36.5%

PE Lat; 6.9%

Other; 10.1%


Portfolio Companies by geographic distribution

2004 2009

Region/State No. of Companies % of Total No. of Companies % of Total

Southeast 195 64.1% 387 80.0%

SP 127 41.8% 274 56.6%

RJ 39 12.8% 75 15.5%

MG 28 9.2% 34 7.0%

ES 1 0.3% 4 0.8%

South 83 27.3% 54 11.2%

PR 15 4.9% 24 5.0%

RS 38 12.5% 18 3.7%

SC 30 9.9% 12 2.5%

Northeast 16 5.3% 30 6.2%

PE 5 1.6% 9 1.9%

CE 3 1.0% 8 1.7%

BA 5 1.6% 5 1.0%

Others 3 1.0% 8 1.7%

Center West 9 3.0% 7 1.4%

North 1 0.3% 6 1.2%

TOTAL 306 100.0% 484 100.0%

NOTE: The sample in 2009 contains 502 companies, of which 484 companies reported information about the state in which the

investment occurred in 2009.


Exits by Sector

Divestitures by sector of economic activity (2005-2008 vs. 2009)

NOTE: The sample contains 180 divestitures (113 total and 67 partial) in the 2005 – 2008 period and 40 divestitures (31 total and 10

partial) in 2009 reporting information about the sector of ecomic activity at the time of divestiture.

4%

4%

4%

3%

1%

9%

3%

2%

2%

22%

5%

4%

6%

27%

1%

1%

3%

3%

3%

3%

5%

5%

5%

5%

8%

8%

8%

10%

35%

Agribusiness


Infrastructure

Biotechnology

Retail




Communication

Food and Beverages

Education

Various Services**

Various Industries*

Energy and Oil

Financial Services


IT and Electronics

2009

2005-2008


Exits: Numbers of divestments by Stage

Seed3% Start-up

5%

VC - Early Stage27%

PE -Growth

18%

PE - Later Stage23%

Mezzanine3%

PIPE19%

Greenfield2%

Divestitures 2005 - 2008

Start-up2%

VC - Early Stage27%

VC - Later Stage

5%

PE -Growth

17%

PE - Later Stage37%

Mezzanine5%

PIPE2%

Distressed5%

Divestitures 2009

NOTE: the sample contains 180 divestitures (113 total and 67 Partial) from 2005 – 2008 and 41 divestitures (31 Total and 10 Partial) in

2009 with information about the stage of the company development.


Exits by Mechanism

IPO17%

Trade Sale28%

PrivateSecondary

Sale15%

PublicSecondary

Sale10%

Buyback20%

Write-off10%

Divestitures in 2009 by exit mechanism

IPO11%

Trade Sale29%

Private Secondary

Sale32%

Public Secondary

Sale3%

Buyback18%

Write-off7%

Divestitures between 2005 and 2008 by exit mechanism

NOTE: the sample contains 151 divestitures (107 total and 44 partial) from 2005 – 2008 and 40 divestitures (30 total and 10 partial) in

2009 with information about the exit mechanism.

GOVERNANCE


Governance: Mgrs & Investors –Lifetime and limitations for new funds

Lifetime of the existing funds

2004 2009

Lifetime (year) # of vehicles % # of vehicles %

3 and 4 - - 7 4.3%

5 and 6 9 9.3% 16 9.7%

7 and 8 24 24.7% 49 28.1%

9 and 10 33 34.0% 58 34.1%

11 to 20 7 7.2% 11 7.0%

None 24 24.7% 35 21.1%

Total 97 100.0% 176 100.0%

Possibility of fundraising for a new

investment vehicle before exiting the

current vehicle

CVM Type HoldingLimited

PartnershipOther Total

Not 7 - 2 - 9

Yes, at any time 31 9 7 4 51

Yes, but only after the investment period of

the vehicle 14 1 6 - 21

Yes, but only after the vehicle has invested

a certain percentage of its commitedcapital

18 1 12 2 33

Total 70 11 27 6 114


Governance: Mgrs & Investors –Term Sheet Conditions

Most common restrictions:

Geographical area of investment 48 14.2%

Stage of investment 45 13.3%

Exit of Partners and Managing Partners of the PE/VC Organization's team 47 13.9%

Investment in assets, projects or companies abroad 40 11.8%

Investment in other asset classes 30 8.9%

Funds committed to this vehicle can't be invested in portfolio companies of another vehicle of this PE/VC

Organization25 7.4%

Admission of new Partners and Managing Partners in the PE/VC Organization's team 20 5.9%

Investment (such as LPs) in other vehicles of the PE/VC Organization 17 5.0%

Investment in public traded assets 16 4.7%

Hedging activity by fund managers 17 5.0%

Investment in companies using debt instruments 12 3.6%

Investment in to a fund of another PE/VC Organization 11 3.3%

"Leveraged Buyout“ deal structuring 10 3.0%

NOTE: Sample of 54 investment vehicles.


Governance: Mgrs & Investors –Term Sheet Conditions

Decision models for investments and divestitures approval2004 2009

# of vehicles % # of vehicles %

Blind pool (GP total control) 27 28% 19 15%

Total control of investors 7 7% 1 1%

Mixed Investment Committee with simple majority 23 24% 32 25%

Mixed Investment Committee with qualified majority 17 18% 38 30%

Mixed Investment Committee by consensus 13 13% 13 10%

Pledge fund 6 6% 8 6%

N/A 4 4% 1 1%

Other 0 0% 16 13%

Total 97 100% 128 100%

NOTE: Number of investment by type of decision model for investment. Sample of 62 PE/VC Organizations

which responded for 128 vehicles.

NOTE: Response from 111 vehicles.

LP’s right to co-invest in

portfolio companiesCVM Holding Direct Investment Limited Partnership Other Total

Yes, it’s a fully guaranteed right 35 5 2 11 - 44

Yes, but only under certain

conditions24 5 - 9 4 36

No. The investors are forbidden to

directly co-invest in any of the

porfolio companies

17 2 - - - 16

Other 13 - - 6 1 15

Total 89 12 2 26 5 111


Governance: Mgrs & Investors –Fund Expenses and Management Fees

Costs and Expenses to be paid by Management Fees

Operational expenses of the PE/VC Organization (GP) (eg, wages, rents, etc.). 94 22.1%

Costs of constitution, mergers, incorporations, divisions or vehicle's liquidation 30 7.1%

Costs incurred in evaluation and analysis of unrealized investments (eg, Due Diligence, etc.). 36 8.5%

Contract of third parties to provide legal, tax and accounting services and consultants for analysis

and recommendation of investment opportunities39 9.2%

Vehicle's administrator service 43 10.1%

Audit expenses of the Vehicles's financial statements 31 7.3%

Fees and commissions related to investment and divestiture operations 20 4.7%

Fees, taxes or state contributions on the assets, rights and obligations of the Investment Vehicle 35 8.2%

Expenses with printing, mailing, publication of reports, forms, correspondence and communications

to Investors (LPs)47 11.1%

Permanent specialized consulting services to support operations (eg. Tecnology, Biotechnology

consultant etc.).26 6.1%

Coverage on losses not paid by insurance policies 20 4.7%

Others 4 0.9%

NOTE: Sample of 50 PE/VC organizations wich responded for 110 vehicles.


Governance: Mgrs & Investors –Management Fee Levels

Management Fee

Fees (%)

2004

PE/VC Organization is both Manager and

Administrator

of the Vehicle (2009)

PE/VC Organization is only the Manager of

the Vehicle (2009)

(Administrator is a third party)

# of

vehicles%

Committed

Capital

(US$ MM)

%# of

vehicles%

Committed

Capital

(US$ MM)

%# of

vehicles%

Committed

Capital

(US$ MM)

%

No Fees 25 26% 950 17% - - - - - - - -

0 < x < 0.5 3 3% 40 1% 1 6% 1,437 1% 5 14% 1,149 32%

0.5 <= x < 1 2 2% 250 4% 0 0% 0 0% 3 8% 603 17%

1 <= x < 1.5 7 7% 1,380 25% 1 6% 287 14% 8 22% 614 17%

1.5 <= x < 2 30 31% 1,400 25% 5 31% 1,213 61% 5 14% 401 11%

2 <= x < 3 21 22% 590 11% 8 50% 471 24% 13 36% 751 21%

x >= 3 2 2% 10 0% 1 6% 7 0% 2 6% 57 2%

N/A 7 7% 960 17% - - - - - - - -

Total 97 100% 5,580 100% 16 100% 1,992 100% 36 100% 3,576 100%

NOTE: The Administrator and the Manager figures are present in the Brazilian CVM PE/VC vehicle regulation. Management fees

structures were analyzed separately for the PE/VC organizations that are both Administrator and Manager of the investment vehicle (a

sample of 16 vehicles), and for those who are only the Manager and the Administrator is a third party (a sample of 36 vehicles).


Governance: Mgrs & Investors –Management Fee’s Calculation Basis

Basis of Management Fee 2004

Administrator

(2009)

Manager

(2009)

During Investment Period After Investment PeriodNo. of

vehicles%

No. of

vehicles%

No. of

vehicles%

Committed Capital Committed Capital 26 27% 8 12% 4 10%

Committed Capital Paid-in Capital 2 2% 1 1% 1 3%

Committed Capital NAV or Equity Value 8 8% 14 21% 11 28%

Committed Capital Investment at Cost 2 2% 15 23% 11 28%

Paid-in Capital Paid-in Capital 9 2% 1 1% 0 -

Investment at Cost Investment at Cost 6 9% 2 3% 0 -

NAV or Equity Value NAV or Equity Value 12 12% 17 26% 5 13%

Expense Budget Expense Budget 2 2% 0 - 0 -

Others 2 2% 7 11% 7 18%

N/A 28 29% 25 39% 22 56%

Total 97 100% 90 100% 61 100%

NOTE: The Administrator and the Manager figures are present in the Brazilian PE/VC regulation issued by the CVM.


Governance: Mgrs & Investors –Carried Interest & Hurdle Rate

Index Rate (%)

2004 2009

No. of

vehicles%

No. of

vehicles%

IGPM

10 or + 3 3% 6 6%

6 < x < 10 8 8% 6 6%

6 or - 19 20% 13 12%

IPCA

10 or + 4 4% 20 19%

6 < x < 10 0 - 25 24%

6 or - 0 - 11 10%

INPC 6 to 12 4 4% 7 7%

US$

10 or + 3 3% 1 1%

6 < x < 10 8 8% 4 4%

6 or - 4 4% 1 1%

Other 6 6% 8 8%

N/A38 39% 3 3%

Total 97 100% 105 100%


Governance: Mgrs & Investors –Carried Interest &Timing

Performance fee payment methodology

# of vehicles %

After the divestiture period 36 29%

After the investment period 7 6%

Deal by Deal 24 19%

In the end of the vehicle ("Total Return") 44 35%

Others 14 11%

Total 125 100%

Performance Fee

(%)

2004 2009

Administrator Manager

# of

vehicles%

# of

vehicles%

# of

vehicles%

0 < x < 5 0 0.0% 2 5.4% 2 2.9%

5 <= x < 10 1 1.5% 1 2.7% 1 1.4%

10 <= x < 20 3 4.5% 2 5.4% 10 14.5%

20 60 90.9% 31 83.8% 53 76.8%

20 < x < 25 1 1.5% 0 0.0% 0 0.0%

x >= 25 1 1.5% 1 2.7% 3 4.3%

Total 66 100% 37 100% 69 100%


Governance: Business Environment

Quality of Corporate Governance perceived by the PE/VC Organization

NOTE: Sample of 82 PE/VC organizations.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Selected proposals after investment

Selected proposals before investment

Analysed proposals

Received proposals

Very Low

Low

Medium

High

Very high


Governance: Business Environment –The Value of Governance

StageArithmetic

Average (%)

Std. Deviation

(%)

Minimum

(%)

Maximum

(%)

Total 13.1% 9.2% 0.0% 32.0%

Venture Capital 17.3% 11.4% 0.0% 32.0%

Private Equity 13.0% 10.3% 0.0% 30.0%

Venture Capital and Private Equity 11.0% 7.5% 0.0% 20.0%

N/A 13.2% 6.2% 5.0% 20.0%

Premium over investment cost PE/VC organizations are willing to pay

NOTE: Sample of 49 PE/VC organizations. 8 of them informed they would pay zero for good corporate governance practices.

Premium over investment cost PE/VC organizations estimate they effectively paid


StageArithmetic

Average (%)

Std. Deviation

(%)

Minimum

(%)

Maximum

(%)

Total 16.2% 9.4% 0.0% 30%


Governance: Type of Port. Cos & Financial Instruments

Type of company %

Limited Liabilities Companies 12 20.7%

Closely Held Corporation 40 69.0%

Public Corporation 6 10.3%

TOTAL 58 100.0%

Financial Instruments used in investee companies

65%

31%

29%

8%

4%

2%

Plain common stocks

Prefered stocks

Debt instruments

Other

Redeemable common stocks

Common stocks with subscription rights (warrants)



Governance: Port. Cos. –BoD Composition

Port. Cos.

BoD Membership

Members by

category(%) of Total

Average Age

(years)

Inside 110 55.3% 46.1

Outside 57 28.6% 41.2

Independent 32 16.1% 42.1

BackgroundOutside Independent

Quantity % Quantity %

Professional Outside Director 6 11.8% 9 25.7%

Professional Independent Director 5 9.8% 13 37.1%

Portfolio Company's Former Executive 4 7.8% 0 -

Angel Investor 0 - 0 -

Family Office Representative 0 - 0 -

Mezzanine Fund Representative 4 7.8% 5 14.3%

Bondholders Representative 0 - 0 -

Financial Institution Representative 0 - 0 -

Member of other PE/VC Organization 0 - 1 2.9%

Member of responding PE/VC Organization 17 33.3% 5 14.3%

Co-Investor Representative 7 13.7% 1 2.9%

Representative of the responding PE/VC Organization 6 11.8% 0 -

Other 2 3.9% 1 2.9%

Total 51 100.0% 35 100.0%

NOTE: Sample of 40 investee companies.

NOTE: Sample of 104 investee companies.


Governance: Port. Cos. –BoD Composition

Portfolio Companies

Executives as Inside Directors% of members of the Board % of shareholders

CEO/President 58.8% 76.1%

Chief Financial Officer (or Adm.) 9.8% 14.3%

Sales Director 11.8% 22.5%

Industrial Director 7.8% 10.5%

HR Director 2.0% 3.0%

Director of Investor Relations 2.0% 3.0%

IT Director - 2.9%

Others 7.8% 17.4%

Executive officers, participation on BoD and shareholding

NOTE: Sample of 49 investee companies


Governance: Port Cos –BoD Composition

Participants in BoD committees and sub-committees

BoD Committe 1 st Most Frequent 2 nd Most Frequent 3 rd Most Frequent

StrategicManaging Partner of the

PE/VC Organization (GP) CEO / President Board of Directors Members

Research & Development CEO / PresidentManaging Partner of the

PE/VC Organization (GP) Board of Directors Members

Risk CEO / PresidentManaging Partner of the

PE/VC Organization (GP)

Nomination /

Remuneration Board of Directors Members CEO / President

Managing Partner of the


Human Resources CEO / President Board of Directors Members

Audit Financial Director Board of Directors MembersManaging Partner of the


IT Financial Director CEO / President

Legal External Consultants Board of Directors Members

Finance Financial Director

Marketing CEO / President Board of Directors MembersManaging Partner of the


Acquisitions/New

Businesses CEO / President Board of Directors Members

Managing Partner of the


Industrial Operation CEO / President Commercial DirectorManaging Partner of the


NOTE: Sample of 17 investee companies


Governance: Port Cos –BoD Compensation and Performance

Remuneration of BoD members

Performance Evaluation of key persons

Are members paid?

Remuneration

related to

performance

Members All None Some

Insiders 23.5% 50.0% 50.0% 33.30%

Outsiders 41.2% 22.2% 50.0% 33.30%

Independent 35.3% 27.8% 0.00% 37.50%

Is there performance evaluation?

Key persons Formal Informal No

Members of the

board3.6% 14.3% 82.1%

CEO 54.5% 15.2% 30.3%

Executive

Officers55.9% 14.7% 29.4%

NOTE: Sample of 25 PE/VC organizations



Governance: Fd Mgrs & Port Cos –Veto Power by minority fund managers

Minority Fund Managers’ Veto Power

Incentives and/or penalties related to the executives performance


95,455%

95,455%

90,909%

86,364%

86,364%

68,182%

54,545%

50,00%

40,909%

22,727%

Merger

Acquisitions

Capital Budget

Indebtedness

Annual Budget

Estrategic Planning

Dividends

Payment of bonuses to executives

Key person hiring

Other

61%

39%

Yes

No


56.3%

50%

25%

12.5%

0%

Stock Options

Earn-out

Replacement of key executives

Positive adjustment in the percetage of participation

Loss of control by the entrepreneur


Governance: 100 Day Plan

Main disruptions in the First 100 Days

NOTE: Sample of 19 PE/VC investee copanies

59%

41%

Yes

No

NOTE: Sample of 32 PE/VC investee companies

63.2%

57.9%

57.9%

52.6%

36.8%

31.6%

31.6%

26.3%

10.5%

Management Control

Financial Strategy

Structure of Human Resources

Marketing Strategy

Resolution of tax, labor and / or social …

Supply Chain

Full redesign of business model

Resolution of environmental contingencies

Others


54%

29%

13%

04%

Leadership

PE/VC Organization (GP) Partner or Manager Responsible for the Deal

"First 100 days" management task force composed by Invested Company's and PE/VC Organization (GP)`s members

Others

PE/VC Organization (GP) Partner or Manager not Responsible for the Deal

69%

31%

Review of Goals Occurrences

YesNo




Main Reasons

Governance: 100 Day Plan

47.4%

31.6%

21.1%

10.5%

Need for proprosing more

challenging targets to the investee

company

Competitive environment

change

Need for involving all hierarchical

levels

Other


Governance: Monitoring Activity

Time spent by PE/VC Organizations on monitoring*

7

41

144

193

8 7

42

58

12 12

39

63

6 6

6980

0

50

100

150

200

250

Participation on the Board of Directors

Participation in the technical committees of the Board of

Directors

Members of the PE/VC Organization (GP) allocated to the team of the invested

company

Total

Venture Capital Private Equity Private Equity e Venture Capital Real Estate and Others

NOTE: Numbers are average time in hours/month/investee company spent in monitoring activity.

Sample of 33 PE/VC investee companies


Governance: Monitoring Activity

97%

87%

39%

32%

29%

26%

24%

18%

16%

16%

CEO / President

Chief Administrative Officer / CFO

Commercial Director

Chief Controller

New Business and Expansion Director

Industrial Director

Others

IT Director

Marketing Director

HR Director

Direct contact with executive officers of portfolio company*:

NOTE: Direct contact of managing partners of the PE/VC Organization with executive partners of the investee company for

the monitoring activity.

Sample of 38 PE/VC investee companies.

THE ROAD AHEAD


The Road Ahead

Making dreams...


The Road Ahead

... Come True!!!


The Road Ahead

Source: Plonski (2009)

Incubators and Tech Parks

PE/VC Portfolio Companies

Geographic Distribution


Closing the Gap: Potential for PE/VC investment in innovative opportunities


Incubators and Tech Parks

PE/VC Portfolio Companies

Geographic Distribution



Educating Entrepreneurs on PE/VCThe FGV & ABDI Initiative

PE&VC Portfolio Companies in 24/26 Sectors

Programs in Strategic Areas

Complexo

Industrial da

Saúde

Nuclear

Energy

Tecnologias de

Informação e

Comunicação

Defense

IndustryNanotecnologia Biotecnologia

Programs to strengthen competitiveness

Automotive

IndustryCapital goods

Textile and

ClothingLumber and

Furniture

Higiene,

Perfumaria

e Cosméticos

Construção CivilComplexo de

Serviços

BiodieselShipbuildingLeather and

FootwearAgroindústrias Plastics OUTROS

Programs to consolidate and expand leadership

Complexo

AeronáuticoMineração Steel

Pulp and

Paper

Petróleo,

Gás natural

e Petroquímica

Chicken and

BeefBioetanol

Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

Nanotecnologia

Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

BiotecnologiaNanotecnologia

Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

Complexo

Aeronáutico


Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

Petróleo,

Gás natural

e Petroquímica

Complexo

Aeronáutico


Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

Bioetanol

Petróleo,

Gás natural

e Petroquímica

Complexo

Aeronáutico


Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

MineraçãoBioetanol

Petróleo,

Gás natural

e Petroquímica

Complexo

Aeronáutico


Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

Higiene,

Perfumaria

e Cosméticos


Petróleo,

Gás natural

e Petroquímica

Complexo

Aeronáutico


Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

Construção Civil

Higiene,

Perfumaria

e Cosméticos


Petróleo,

Gás natural

e Petroquímica

Complexo

Aeronáutico


Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

Complexo de

ServiçosConstrução Civil

Higiene,

Perfumaria

e Cosméticos


Petróleo,

Gás natural

e Petroquímica

Complexo

Aeronáutico


Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

Agroindústrias

Complexo de


Higiene,

Perfumaria

e Cosméticos


Petróleo,

Gás natural

e Petroquímica

Complexo

Aeronáutico


Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

BiodieselAgroindústrias

Complexo de


Higiene,

Perfumaria

e Cosméticos


Petróleo,

Gás natural

e Petroquímica

Complexo

Aeronáutico


Complexo

Industrial da

Saúde

Tecnologias de

Informação e

Comunicação

Education and

OTHERSBiodieselAgribusiness

ServicesCivil

Construction

Personal Care

and Cosmetics

MiningBioethanolOil,

Natural gas and

Petrochemicals

Aerospace

Industry

BiotechnologyNanotechnologyHealth Industrial

ComplexCommunications

and IT

4/6

7/7

13/13

Source: GVcepe and ABDI - Productive Development Policy (PDP)


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