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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
Comprehensive Research
180PE&VC
Managing
Organizations
144Surveyed
80%of the industry
surveyed
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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$1.00 in Dec 2008 and Dec 2009, respectively). All annual
figures were translated at year end nominal exchange rates.
15%p.a.
CAGR 2007-2009
43%p.a.
CAGR 2005-2009
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
Expansion of the Asset Class
SOURCE: BACEN, GVcepe
0.6%
0.8%0.9%
1.0%
0.9%
1.0%
0.9%
1.2%
2.0%
1.8%
2.3%
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Committed Capital as % of GDP
2x since 2004
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
Limited Partnership
37%
CVM* 26%
Holding 4%
Direct Investment
15%
Corporate Ventures 1%
Other 7%
Committed Capital Breakdown
Public Sector3%
Private Sector Organizations
71%
Public Sector Organizations
8%
Subsidiaries of Financial
Institutions 17%
Corporate Ventures
1%
Committed Capital by PE/VC
Organization CategoryCommitted Capital by Investment
Vehicle’s Legal Structure
* All vehicle structures according to Brazilian PE/VC regulation CVM 391, 209, 402
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
Committed Capital Breakdown2008 (US$ 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.
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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.
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
Copyright © 2010. Fundação Getulio Vargas - 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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
* Various Industries: E.g.: Chemicals, Mechanicals, Electric, Metallurgic, Packaging, Textiles.
** Various Services: E.g.: Call Center, Consulting.
1%
2%
2%
3%
3%
3%
4%
4%
4%
11%
12%
13%
14%
24%
Infrastructure - other
Extractive Industries
Entertainment/Tourism
Pharmaceutical/Medical/Aesthetics
IT and Electronics
Agribusiness
Communication
Education
Energy and Oil
Financial Services
Retail
Civil Construction/Real Estate
Various Industries*
Food and Beverages
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
* Various Industries: E.g.: Chemicals, Mechanicals, Electric, Metallurgic, Packaging, Textiles.
** Various Services: E.g.: Call Center, Consulting.
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%
Civil Construction/Real Estate
IT and Electronics
Various Industries*
Retail
Food and Beverages
Pharmaceutical/Medical/Aesthetics
Various Services**
Infrastructure - other
Agribusiness
Education
Transportation and Logistics Services
Extractive Industries
Entertainment/Tourism
Financial Services
Energy and Oil
Including all investments
Excluding one US$ 0.765bn investment in energy transmission
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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 .
* Various Industries: E.g.: Chemicals, Mechanicals, Electric, Metallurgic, Packaging, Textiles.
** Various Services: E.g.: Call Center, Consulting.
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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%
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
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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
Entertainment/Tourism
Infrastructure
Biotechnology
Retail
Pharmaceutical/Medical/Aesthetics
Transportation and Logistics Services
Extractive Industries
Communication
Food and Beverages
Education
Various Services**
Various Industries*
Energy and Oil
Financial Services
Civil Construction/Real Estate
IT and Electronics
2009
2005-2008
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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.
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
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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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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.
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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.
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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).
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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.
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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%
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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%
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
NOTE: Sample of 42 PE/VC organizations.
StageArithmetic
Average (%)
Std. Deviation
(%)
Minimum
(%)
Maximum
(%)
Total 16.2% 9.4% 0.0% 30%
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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)
NOTE: Sample of 52 PE/VC organizations.
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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.
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
PE/VC Organization (GP)
Human Resources CEO / President Board of Directors Members
Audit Financial Director Board of Directors MembersManaging Partner of the
PE/VC Organization (GP)
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
PE/VC Organization (GP)
Acquisitions/New
Businesses CEO / President Board of Directors Members
Managing Partner of the
PE/VC Organization (GP)
Industrial Operation CEO / President Commercial DirectorManaging Partner of the
PE/VC Organization (GP)
NOTE: Sample of 17 investee companies
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
NOTE: Sample of 34 PE/VC organizations
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
NOTE: Sample of 22 PE/VC organizations
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
NOTE: Sample of 16 PE/VC organizations
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
NOTE: Sample of 32 PE/VC investee companies
NOTE: Sample of 24 PE/VC investee companies
NOTE: Sample of 19 PE/VC investee companies
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
The Road Ahead
Making dreams...
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
The Road Ahead
... Come True!!!
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
The Road Ahead
Source: Plonski (2009)
Incubators and Tech Parks
PE/VC Portfolio Companies
Geographic Distribution
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
Closing the Gap: Potential for PE/VC investment in innovative opportunities
Source: Plonski (2009)
Incubators and Tech Parks
PE/VC Portfolio Companies
Geographic Distribution
Source: Plonski (2009)
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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
BiotecnologiaNanotecnologia
Complexo
Industrial da
Saúde
Tecnologias de
Informação e
Comunicação
Petróleo,
Gás natural
e Petroquímica
Complexo
Aeronáutico
BiotecnologiaNanotecnologia
Complexo
Industrial da
Saúde
Tecnologias de
Informação e
Comunicação
Bioetanol
Petróleo,
Gás natural
e Petroquímica
Complexo
Aeronáutico
BiotecnologiaNanotecnologia
Complexo
Industrial da
Saúde
Tecnologias de
Informação e
Comunicação
MineraçãoBioetanol
Petróleo,
Gás natural
e Petroquímica
Complexo
Aeronáutico
BiotecnologiaNanotecnologia
Complexo
Industrial da
Saúde
Tecnologias de
Informação e
Comunicação
Higiene,
Perfumaria
e Cosméticos
MineraçãoBioetanol
Petróleo,
Gás natural
e Petroquímica
Complexo
Aeronáutico
BiotecnologiaNanotecnologia
Complexo
Industrial da
Saúde
Tecnologias de
Informação e
Comunicação
Construção Civil
Higiene,
Perfumaria
e Cosméticos
MineraçãoBioetanol
Petróleo,
Gás natural
e Petroquímica
Complexo
Aeronáutico
BiotecnologiaNanotecnologia
Complexo
Industrial da
Saúde
Tecnologias de
Informação e
Comunicação
Complexo de
ServiçosConstrução Civil
Higiene,
Perfumaria
e Cosméticos
MineraçãoBioetanol
Petróleo,
Gás natural
e Petroquímica
Complexo
Aeronáutico
BiotecnologiaNanotecnologia
Complexo
Industrial da
Saúde
Tecnologias de
Informação e
Comunicação
Agroindústrias
Complexo de
ServiçosConstrução Civil
Higiene,
Perfumaria
e Cosméticos
MineraçãoBioetanol
Petróleo,
Gás natural
e Petroquímica
Complexo
Aeronáutico
BiotecnologiaNanotecnologia
Complexo
Industrial da
Saúde
Tecnologias de
Informação e
Comunicação
BiodieselAgroindústrias
Complexo de
ServiçosConstrução Civil
Higiene,
Perfumaria
e Cosméticos
MineraçãoBioetanol
Petróleo,
Gás natural
e Petroquímica
Complexo
Aeronáutico
BiotecnologiaNanotecnologia
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)
Copyright © 2010. Fundação Getulio Vargas - GVcepe.
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