H. What do you believe are the greatest challenges facing the sector or industry you would like to specialize in at IE? What role do you hope to be able to play in this sector or industry in the medium term?
H. WHAT DO YOU BELIEVE ARE THE GREATEST CHALLENGES
FACING THE SECTOR OR INDUSTRY YOU WOULD LIKE TO
SPECIALIZE IN AT IE? WHAT ROLE DO YOU HOPE TO BE ABLE TO
PLAY IN THIS SECTOR OR INDUSTRY IN THE MEDIUM TERM?
6 years in Invesment Analysis
WHERE HAVE I BEEN WORKING IN?
My experiences Opportunities
• Brazil is a land of opportunities
• Low professionals with experience
• Middle Market with low acces to capital
• Few funds dedicated to middle market
• Long way to close a deal
• Familiar and informal Companies
• Dependence of Taxes Incentive
5 years in Private
3 years in an
LATIN AMERICA OVERVIEW
High Growth rates, huge consumption market, political environment establishment and opportunity to increase
the Credit/GDP and Investment/GDP
Brazil – Major Statistics (1)
Area 8.5 million km2
Population 200 million
GDP (2014) 2.25 USD Trillion
Real GDP CAGR (2004-2014) 3.5% yoy
Inflation CAGR (2004-2014) 5.3% yoy
Middle Market Companies(3)
(1) IBGE, Bacen
(2) Capital IQ (BRL/USD)
(3) IBGE definition: companies with 50 ~ 249 employees.
FX Rate(2)Brazilian PE Activity Overview
Largest economies by GDP(5)
(5) World Bank - 2013
WHY AM I CHOOSING BRAZILIAN MARKET?
WHY BRAZIL CAN BE GOOD FOR PRIVATE EQUITY INDUSTRY? 6
Class and Credit
PRIVATE EQUITY FUND’S OPPORTUNITIES:
Brazil has a limited number of listed companies...
...and public market is restricted to larger companies... ...with larger offerings even compared to developed countries
Market for public offerings has been frozen since 2007
Capital Markets are not an option for most Middle-Market Companies in Brazil
% of total CompaniesSize % of capital available
Advised by bankers
Limited financial advisory
Mostly proprietary deals
FEW FUNDS FOCUSED IN MIDDLE MARKET COMPANIES 9
Initally Screened NDAs signed Team put on IC’s radar IC Approval
IT IS DIFFICULT TO CLOSE A DEAL 10
~1% of total companies analized become a LOI executed
Informality - Mid Size Companies
DEVELOPING MARKET WITH INFORMAL COMPANIES
Informality - Mid Size Companies
Source: PNAD; Ministério da Fazenda
Region Tax Incentive
North ICMS -Reduction from 70% to 90%
Northeast ICMS - Reduction from 70% to 90%
IRPJ - Reduction of 70%
Midwest ICMS - Reduction of 73%
Southeast ICMS -ES and RJ Reduction of 73%
South ICMS -SC and RJ Reduction from 70% to
• It is very difficult to measure the amount of Brazilian informal enterprises. The latest study of the PNAD
estimated that about 40% of mid-size companies presented some informality, although other institutes argue
that this number can be higher.
• Furthermore, most companies only come to formality if they can achieve any tax incentive. These companies
do not generate operating profit but they can generate cash flow with temporary tax reduction.
WHAT ROLE DO I HOPE TO BE ABLE TO PLAY IN THIS SECTOR OR
INDUSTRY IN THE MEDIUM TERM?
To work as an entrepreneur, feeling like the owner of the business, will make me a
more prepared professional to deal with the unexpected such as: changes in taxes
and laws, companies with few financial information, informality, etc.
What is Important for
a Private Equity
Ability to handle
To be able to analyze different types of industries. To identify low-hanging fruits and
have the capability to plan a long-term strategy with good returns for both the Fund
and the Entrepreneur.
To be able to balance the interests of sellers and buyers, and to close a deal with
people from different perspectives and backgrounds.
Soft skills and
Increasing my knowledge of Brazilian and International market practices will enable
me to analyze an investment and to measure the progress of a particular industry for
the following years.
THE ROLE OF IE’S IMBA IN MY PATH 15
• The importance of formal education in both my professional and personal life;
• IE’s recognized brand will open doors: expansion of my knowledge base, contact
with the best professionals and key international companies.
• Skills and Knowledge acquisition in a diverse environment, which favors the
• At IE I can achieve Domain Expertise; Leadership Ability and Personality Development.
IE’s alumni • Consolidated business network: I will meet and interact in a relevant manner with
colleagues, professors and teaching staff;
• Exchange of different perspectives, diverse experiences, access to opportunities
only IE’s alumni can provide.
• Gaining insight into international markets will bring me a different overview of the
• Opportunity to gain perspective of the Financial Industry in different countries.