Thu, 17 May 2012 15:12:50 -0800WeeblyTue, 16 Mar 2010 01:43:22 -0800http://www.brazilmeansbusiness.com/1/post/2010/03/latin-america-pevc-report-interview-with-alvaro-goncalves.htmlLAVCA* spoke with Alvaro Goncalves, Managing Partner of Stratus Investimentos. Founded in Sao Paulo, Brazil in 1999, Stratus manages a $285 million mid-market private equity fund, which includes a mezzanine infrastructure fund in joint venture with Darby Overseas. Stratus is currently raising capital for the buyout platform and real estate.

 * The Latin American Venture Capital Association (LAVCA) is a not-for-profit membership organization dedicated to supporting the growth of the private equity and venture capital industry in Latin America and the Caribbean.

LAVCA: How do you differentiate yourself strategically from other funds active in Brazil?

Goncalves: Our mid-market strategy is executed by dedicated investment teams in three platforms: 1) Growth Capital (minority, growth related investments), 2) Buyout (mid-market control situations for consolidations and successions in fragmented industries) and 3) Specialized Funds (sector specific funds in areas where Brazil offers major development opportunities, such as infrastructure and real estate). Over 80% of the local and international capital allocated to PE in Brazil is targeting larger transactions, despite the fact that the best track record of returns is in the middle market. In the Brazilian context, we define mid-market as companies with annual sales of US$30-200m, and between 250 and 1000 employees. So the first differentiation is the mid-market focus – not only based on size, but more importantly on the profile of our teams – with a more hands on, operations drive, in addition to financial management skills.

LAVCA: Why did you decide to partner with Darby on the infrastructure fund?

Goncalves: Darby and Stratus had a collaborative relationship well before we teamed up for our joint-venture fund. Then we recognized that there is a complementary fit for the two firms in Brazil. Darby has specific expertise in both the infrastructure and mezzanine fields, and Brazil offers an excellent opportunity in infrastructure. Stratus brings the middle market approach to the infrastructure segments (our fund does not compete with large scale financing providers for the giant projects in energy, national roads, etc), and also the relationship with local institutional investors who had indicated their interest in this approach.

LAVCA: What is your firm's strategy for financial engineering as a means of adding value to portfolio companies?

Goncalves: Given the macroeconomic conditions in Brazil and the middle-market essence of our strategy, we don't have financial engineering as a key source of capital gains. Growth, organic or through acquisitions is a much more important return driver. We tend to structure our transactions with equity or quasi-equity instruments and a very conservative consideration of leverage. Seller finance in add-on acquisitions is a frequent feature, and a more conservative type of leverage.

LAVCA: How do you attempt to mitigate currency risk for your LPs?

Goncalves: We don't pursue any single measure to hedge currencies in long term investments. We have Brazilian LPs investing local currency, and our new buyout fund is being set for LPs with US dollars, Euro and Asian currencies. A direct or indirect exposure to the Brazilian Real is positive for any diversified portfolio from a global, international allocation point of view. The dollar as an anchor is probably an assumption to be challenged for the term of a PE fund. With the goal of diversifying into currencies from strong economies, the Brazilian Real is very attractive.

LAVCA: Brazil has recovered remarkably from the global downturn in 2008-2009. How would you describe the PE/VC environment in Brazil today, in terms of deal and exit opportunities? What are the risks going forward?

Goncalves: Our market today is characterized by its diversity and a strong culture of entrepreneurship. It's an environment towards growth and consolidation, with a good stream of opportunities. There are less than 30 established PE teams in Brazil, including local and international GPs. More than eighty percent of the PE capital available is targeting large buyouts, primarily seeking opportunities to take companies to the regional / global level. Approximately 10% of established Brazilian PE is targeting the middle-market, where there are thousands of companies all over the country. We of course see the best opportunity in this segment going forward.

Exits will be dominated by sales to strategic buyers (international and local companies on the buy side) but local capital markets will continue to increase in importance as well.

LAVCA: How did the global financial crisis affect your investment strategy? Has your investment criteria changed at all?

Goncalves: Our investment strategy did not have a relevant component of leverage or an export focus. Therefore, we have not changed the strategy as such. We have in fact implemented a more rigorous screening on projections and stress tests of our analysis, to cope with the increased volatility which we think will remain present in most markets including Brazil.

LAVCA: Do current financial conditions present unique opportunities in any sectors?

Goncalves: Current conditions and some trends of the Brazilian economy do offer specific opportunities. Services and consumption related demand (to cope with the 25 million people added to the middle class over the last five years) share center stage with infrastructure related projects (general infrastructure and also with the World Cup and Olympics trends, in particular), Oil and Gas (massive oil discoveries were and continue to be announced every quarter in Brazil). We don't see specific opportunities coming from any financial trend, except for the consideration of a smaller demand for exports due to the lower growth rate of the global economy for the next few or several years.

LAVCA:What sectors should be avoided? Why?

Goncalves: Luxury, high ticket goods tend to be avoided in the short to mid-term. We also tend to avoid -or be very selective about- commodity related sectors, given a possible long cycle of corrections which may occur in the future - and other highly cyclical sectors as well.

LAVCA: Do you foresee any significant changes in the Brazilian regulatory environment?

Goncalves: No. We have a highly regulated financial sector and some improvements may occur, but most of the regulatory reform influencing capital markets directly was implemented in the past ten years. We hope, however, that a tax reform and a simplification of labor laws help the ease the functioning of Brazilian companies.

LAVCA: Can you mention one of your recent investments?

Goncalves: We have invested in Amyris Brasil, the operating subsidiary of Amyris Inc (USA) which produces fuels and chemicals from sugarcane, in partnership with TPG, Kleiner Perkins and Khosla (shareholders of Amyris Inc), among others.

LAVCA: Tell us about your most recent exit- how did that go?

Goncalves: We have sold our stake in Graúna Aerospace, an airline parts producer in 2008, with 27%pa return. We have also been able to recover capital in two exits in 2009 from two companies which did not perform so well. We have an aggregate return on our portfolio in excess of 22% pa and 2.5 times capital and in excess of 33% pa and 3.6 times capital in US$.

LAVCA: How has your strategy for exiting your investments changed in light of the economic downturn?

Goncalves: We are in the process of registering two companies for IPOs. As Brazil weathered the crisis quite well, we haven't changed our businesses strategy much, except for considering new trends, new volatility levels – which affect screening new investments more than any particular strategy or structure.

LAVCA: How have return targets for your fund changed since fall 2008?

Goncalves: Asset prices were corrected and we see a somewhat higher potential increase in new investments.

LAVCA: What are you hearing from LPs about their willingness to invest in emerging markets private equity?

Goncalves: We have heard a growing interest and we are sure the EM share of institutional LP's wallet will increase significantly in 2010/2011.]]>Thu, 11 Mar 2010 04:28:18 -0800http://www.brazilmeansbusiness.com/1/post/2010/03/nimbuzz-the-dutch-startup-to-speak-at-the-bmb-2010.htmlAmsterdam, March 10, 2010/ Conversion Communications presents the first edition of the Brazil Means Business Symposium in Holland.

Brazilian and European entrepreneurs and investors will debate the growing interest in the emerging economy that signifies a huge market for web applications and Internet startups. Why? Brazilian emerging middle class is pushing demand for consumer goods and services. They are connected to the internet not through their desktops, many are surfing the web for the first time in their mobile phone. For starters: mobile internet and social media adoption rates are the highest in Latin America. Sonico, Latin America's answer to Facebook, boasts 40 million members.  The social media site has become so sticky that Sonico has contracted international payment powerhouse Global Collect to handle their international transactions.

Among the speakers offering a glimpse on what Brazil signifies for the global economy, will be Diego Remus, the editor-in-chief of Startupi.com, of the highly regarded startup news site in Brazil. STARTUPI.COM is funded by the Michael Niklas, the angel investor from New York that is behind two other very successful internet startups in Brazil: Amanaie and Compra3.

Startupi.com has found quickly a place in the minds of Brazilian and foreign entrepreneurs because it provides “inside the industry”, daily, insightful news about the startup culture and landscape in Brazil. And it is translated to English too. A first. Angel investors, private equity, venture capital, and entrepreneurs reach daily for the site to keep on the loop, to know where is the next next great startup, who is investing in what and when - and how foreign capital and businesses can come to Brazil and expand operations.

Nimbuzz, the three year old Dutch mobile applications startup that started operations in Brazil in 2008 is doing very well. The 200 million strong nation and its burgeoning middle class are downloading Nimbuzz applications and services faster than you can say Brazil. ]]>Thu, 04 Mar 2010 01:54:49 -0800http://www.brazilmeansbusiness.com/1/post/2010/03/softsul-official-partner-of-bmb-2010.html Brazil Means Business Symposium
 A 360 View of an Emerging Economy

AMSTERDAM – March 1, 2010/  Conversion Communications presents  the Brazil Means Business Symposium, on March 29th 2010, in Holland. It will showcase some of the fastest growing Brazilian companies in the IT and Bio/Pharma sectors.

SOFTSUL, the Rio Grande do Sul state branch of Brazilian software association SOFTEX, is inviting entrepreneurs and companies to participate in thesymposium that will cover all aspects of establishing successful foreign partnerships.

Brazil’s software industry excels in three areas: banking, e-government, and healthcare.So it is no surprise thateighteen IT companies from the Southern region have confirmed presence in the upcoming CEBIT, in Hannover, the largest international fair for the IT sector.  Another ten more are invited to be in Holland, on March 29th, to meet potential partners.

 Jose Antonio Antonioni, Executive Director of SOFTSUL  points out that: “One of the verticals SOFTSUL focuses on is entrepreneurship. We encourage firms to organize themselves in consortiums and joint-ventures. This symposium is aligned with our goals of promoting the Brazilian software industry abroad.”

There is keen interest from European entrepreneurs to export goods and services to the huge consumers’ market that Brazil represents. And there is interest, from Brazilian companies, in biomedical R&D carried on by European companies. Investors will also attend the Brazil Means Business Symposium to know about the latest opportunities in the sector and learn about Brazil’s M&A landscape.

As the host of the World Cup in 2014, the Olympic Games in 2016, and with major investments being made in infrastructure by the government, Brazil presents a unique opportunity for foreign companies in the infrastructure, banking, biotechnology, and mobile technology sectors in the next decade.
 ]]>Thu, 04 Mar 2010 01:45:39 -0800http://www.brazilmeansbusiness.com/1/post/2010/03/startupicom-is-the-official-media-partner-on-bmb-2010.htmlBrazil Means Business: A 360 View of an Emerging Economy

Amsterdam, March 3, 2010/ Conversion Communications presents the first edition of the Brazil Means Business Symposium in Holland. Brazilian and European entrepreneurs and investors will debate the growing interest in the emerging economy that signifies a huge market for web applications and Internet startups. 

Why? Brazil's emerging middle class is pushing demand for consumer goods and services. They are connected to the internet not through their desktops, many are surfing the web for the first time in their mobile phone. For starters: mobile internet and social media adoption rates are the highest in Latin America. 

Sonico, Latin America's answer to Facebook, boasts 40 million members.  The social media site has become so sticky that Sonico has contracted international payment powerhouse Global Collect to handle their international transactions. 

Among the speakers offering a glimpse on what Brazil signifies for the global economy, will be Diego Remus, the editor-in-chief of Startupi.com, of the highly regarded startup news site in Brazil. STARTUPI.COM is funded by the Michael Niklas, the angel investor from New York that is behind two other very successful internet startups in Brazil: Amanaie and Compra3. 

Startupi.com has found quickly a place in the minds of Brazilian and foreign entrepreneurs because it provides “inside the industry”, daily, insightful news about the startup culture and landscape in Brazil. And it is translated to English too. A first. 

Angel investors, private equity, venture capital, and entrepreneurs reach daily for the site to keep on the loop, to know where is the next next great startup, who is investing in what and when - and how foreign capital and businesses can come to Brazil and expand operations.]]>Thu, 25 Feb 2010 10:48:13 -0800http://www.brazilmeansbusiness.com/1/post/2010/02/brazil-increased-demand-for-consumer-goods-and-housing.htmlAMSTERDAM – February 26th, 2010/  The first edition of the Brazil Means Business Symposium, that will take place March 29th 2010, in Holland, will showcase some of the fastest growing Brazilian companies in the IT and Bio/Pharma sectors.

Brazil has become an attractive market to do business in the last decade, according to the President of the Banco De Lage Landen, in the South of Brazil, Porto Alegre, Mr. Maarten Viskaal: "Brazil is economically developing very well. Huge investments are planned for in infrastructure, energy and oil extraction. The middle-class is upcoming and pushing domestic demand for consumer goods and housing.”, and “more and more there will be a push into high-tech solutions".  In Brazil, De Lage Landen provides vendor finance services to the agricultural, construction, healthcare, and technology sectors.

Mr. Viskaal, who has been based in the country for several years, and has witnessed the fast pace of transformation and greater economic stability, adds that the "The scenario of Brazil diving into a deep economical crisis combined with hyper inflation and currency devaluation is something of the past. The country is economically well run and has a strong banking sector". 

There is keen interest from European entrepreneurs to export goods, biotech imagining equipment, and services to tap the huge consumers’ market that Brazil represents. And there is interest, from Brazilian companies, in biomedical R&D carried on by European biotech companies. Entrepreneurs, investors, market analysts, and technology startups interested in going to market, forming partnerships, and investing in Brazil will be attending the Brazil Means Business Symposium, to better understand how the emerging economy is poised for growth.

As the host of the World Cup in 2014, the Olympic Games in 2016, and with major investments being made in infrastructure by the government, Brazil presents a unique opportunity for foreign companies in the infrastructure, banking, biotechnology, and mobile technology sectors in the next decade..]]>Tue, 02 Feb 2010 11:15:03 -0800http://www.brazilmeansbusiness.com/1/post/2010/02/-web-20-in-brazil-start-ups-ready-for-investors.html
From www.baguete.com.br 
By Marcia Lima

" ...Diego Remus, consultor e editor-chefe do Startupi, blog dedicado a startups brasileiras:

"Os empreendedores web mais bem sucedidos explicam que empreender na web só pode ser comparado à paixão pela incerteza, mesmo que hoje em dia o mercado esteja muito propício para esse tipo de atividade”, comenta Remus.

E ponha propício: o Buscapé, por exemplo, iniciou por aqui e acabou sendo vendido para a Naspers por US$ 342 milhões. 

A venda da empresa especializada em pesquisa e comparação de produtos e preços na web é um ponto a favor das startups brasileiras, segundo Gilberto Alves Júnior, sócio e diretor executivo da Amanaiê, agência focada em aplicativos para publicidade e branding em..."   Read the full story here

]]>Mon, 25 Jan 2010 14:25:59 -0800http://www.brazilmeansbusiness.com/1/post/2010/01/social-media-usage-in-brazil-state-of-the-art.htmlThis is a great interview from www.baguete.com with Andre Telles.]]>Sun, 24 Jan 2010 05:39:29 -0800http://www.brazilmeansbusiness.com/1/post/2010/01/-shoe-sector-receives-boost-to-export-from-apex.htmlThe Brazilian Export and Investment Promotion Agency (APEX) announced, during the Couromoda fair, partnerships with the Brazilian Association of Shoe Manufacturers (Abicalçados) and with the Brazilian Association of Shoe and Leather Components Industries (ASSINTECAL). Investments by APEX will be 28.7 million   (US$ 16 million) in 2010, and 27 million reais (US$ 15 million) by ASSINTECAL.

APEX: Brazil exported US$ 1.36 billion in shoes last year

“One of the great objectives after the renewal of the agreement will be diversification of markets and partners. Brazil already exports shoes to 146 countries.” said Alessandro Teixeira, president of APEX.

According to the Abicalçados agreement, APEX will invest 19.1 million reals (US$ 11 million) and the association, 17.9 million (US$ 10 million). This partnership will allow 471 producers of shoes to receive training for export.

The fourth main exporter of shoes in the world, in 2009, the country made US$ 1.36 billion with sales abroad. In 2010, industry analysts expect growth of 3% in export revenues.

Leading Brazilian shoe sector exports are the states of Rio Grande do Sul with US$ 765.8 million, Ceará with US$ 294.3 million and São Paulo and US$ 118.9 million. With regard to the shoe component market, in 2009, Brazil exported US$ 938 million. Assintecal estimates that in 2010 exports will grow between 3% and 5%.]]>Mon, 18 Jan 2010 04:56:28 -0800http://www.brazilmeansbusiness.com/1/post/2010/01/ricardo-lacerda-br-partners-raises-250-million-brazilian-reais.htmlFrom Latin Finance
January 18 2010
BR Partners Raises PE Fund

As former Citi banking chief Ricardo Lacerda builds up a new banking and trading shop called BR Partners, the initial strategy centers around managing a new private equity fund, he tells LatinFinance. “We raised BRL250m exclusively from wealthy Brazilian families to make minority investments in high-growth companies,” he says. Unlike many typical PE funds that have lockups and divestment periods, the equity raised for investment has few restrictions on what can be done with the money and how it must return to investors, says Lacerda. The fund will focus exclusively on Brazilian companies with high growth potential, in a variety of sectors. The banker worked with private and public companies, notably Hypermarcas, in his former role as a senior banker at Citi. In M&A advisory, Lacerda says he plans to take on any and all Brazil-focused players, albeit initially with smaller staff. In December, BRP advised Hypermarcas in the acquisition of Neo Quimica for BRL1.4bn]]>Sat, 16 Jan 2010 03:01:34 -0800http://www.brazilmeansbusiness.com/1/post/2010/01/the-emerging-middle-class-1-billion-and-counting.html"It has been estimated that developing economies alone will invest as much as some $2.25 trillion annually over the next three years to meet infrastructure needs." From www.cio-today.com]]>