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Lançamento do programa Elite
FIESP, São Paulo 11.04.2019
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General Consideration
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Why Brazil
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Source: BBVA Research, BNP Paribas Research, IBGE, Banco Central do Brasil.
Investments
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Key 2018 M&A Transactions
Note: Key selected transactions announced or closed in 2018 in Brazil (either local or inbound). FX rate USD/BRL assumed at 3,5.
Source: PWC report, Banco Central do Brasil, Dealogic, MergerMarket, Crunchbase.
Transactions involving
Italian Buyer
- While Brazil still faces political
uncertainty with its upcoming
presidential election, the country’s
economy is rebounding, with
investment and M&A activity showing
strong momentum
- Many large deals were completed in
Brazil in 2017 and 2018, mainly due to
Brazilian conglomerates in need of
restructuring
- Transactions like the $14.6bn acquisition
of Fibria Celulose by Suzano Papel e
Celulose, State Grid Corp’s acquisition
of CPFL Energia for approximately
$4.5bn and the still ongoing negotiations
between Boeing and Embraer about a
potential commercial aviation
partnership demonstrate that,
although Brazil’s political
environment is still volatile, there is
business to be done
- Local and multinational strategic players
as well as financial investors are
reviewing their portfolios and
identifying new opportunities as well
as areas for consolidation
- Total M&A activity will likely grow over
the coming years as multisector
investments are made to improve
Brazil’s infrastructure inefficiencies in
the healthcare, education, and logistics
sectors.
Date Acquiror Target Sector
Deal Value
(US$MM)
Jan-18 State Grid Corp. CPFL Energia AS Energy & Power 4.500
Feb-18 Kinross Gold Gerdau (Assets) Energy & Power 240
Mar-18 Syngenta Strider Agribusiness N.A.
Mar-18 Advent International Easyinvest Fintech 60
Mar-18 DST Global NuBank Fintech 150
Mar-18GTM Holdings
(Advent International)quantiQ Chemicals 160
Mar-18 Custom Nitere IT & Hardware N.A.
Apr-18Suzano Papel
e CeluloseFibria Celulose Agribusiness 14.600
Apr-18 Raízen CombustíveisShell Argentina
(Assets)Oil & Gas 950
May-18 Kroton Somos Education 1.350
Jun-18 Enel Eletropaulo Energy & Power 1.500
Jun-18 Advent International Walmart Brasil Retail 2.200
Jul-18 Naspers Movile Technology 125
Sep-18 Buzzi Unicem Grupo Ricardo
BrennandConstruction 200
Selected 2018 M&A Transactions in Brazil
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Brazilian Bureaucracy
World Bank Ranking of Doing Business (190 countries)
Ranking
Brazil
125th
Dealing with Construction Permits 170th
Starting a Business 176th
Starting a Business 102
# of Days
Brazil
Avg.
OCDE
8
Average time to import product 63 9
Paying Taxes 184th
Source: 2017 World Bank report - Doing Business (Brazil).
Ease of Doing Business
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Labor Market
And if Brazil is famous to be
the only five-time football
champion in the world...
...It is also world champion
in labor lawsuits!
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-
400
800
1.200
1.600
2.000
2.400
2,038
792
654
405 378 330 286 277 269 261 260 243 239 226 218 175 168
55
Time spent to pay taxes
BRA VEN ECU ARG PRY JPN MEX URY ITA CHN PER IND COL TUR ALE USA RUS LUX
World Average:
261 hours / year
Hours spent
yearly
Source: 2017 World Bank report - Doing Business (Brazil).
Time spent to pay taxes in Brazil of 2,038 hours per year
vs. a world average of 261 hours
Management of the Brazilian Tax System
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Management of the Brazilian Tax System (Cont’d)
P&L
Sales
Taxes
Net Sales
Cost of Goods
Gross Margin
G&A
EBITDA
Income Taxes
Profit / Loss
Cash Generation ?
Lucro
Presunto / Real
FX Risk / External
Financing
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Size > 3 millions km2
Economy (GDP) > US$ 1.000 TRI
Population > 100 millions
Canada AustraliaRussia India Cina
Stati Uniti BrasileIndonesia Nigeria
BangladeshPakistan
Giappone Messico
Spagna
Germania FranciaRegno Unito
Italia Corea del Sud
Source: Investe São Paulo
Why Brazil
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Brazilian Privatization Program – details
Highways: 14.000 km
Railways: 25.000 km
34 Airports
29 Port Terminals
Privatization, Concessions, Renewals or
Leases
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Brazilian Privatization Program - Roadmap
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13
Braskem
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14
NEXA
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15
Petrobras
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External Financing
It is important to consider that a branch can have a greater competitiveness
linked to the ability to finance itself with the cost of European money.
Brazilian Branch
HQs Overseas
Inter-company
financing or
with local
bank / stand-by
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Cost of Money
Source: BBVA, Bloomberg, Banco Central do Brasil.
Interest Rates: SELIC
(% end of period; forecasts from Sep-2018 onwards)
Oct-12
1st Dilma
Mandate
Apr-14
Beginning of
Recession
Dec-16
End of
Recession
Mar-18
SELIC
record-low
level
8,00
Dec-19
Year-end
Target
6,50
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The possibility to raise capital in new form
Companies InvestorsAlternative
Forms
Brazilian
Companies
Brazilian
Companies
Brazilian
Companies
M&A
Partnership
Equity
Debt / Bonds
Covertible
Basket Bond
Spac in Cloud
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THANK YOU
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Business Contact
Graziano Messana
Avenida Angélica, 2530
01228-200 São Paulo SP
Tel. +55 11 3666 0271
www.gmventure.com
Photo by Akos Major