1. Overview of Private Equity & Venture Capital in Brazil Breakfast Seminar New York – November 2008 Luiz Eugenio Junqueira Figueiredo, Chairman ABVCAP

2. 2 I.ABVCAP II.PE&VC – Economic Importance III.Brazil: An Enabling Environment IV.Brazilian PE&VC Industry V.Conclusions Agenda

3. 3 ABVCAP The Association of the Brazilian PE & VC industryThe Association of the Brazilian PE & VC industry Who Are We Our Mission Membership Promote and develop long-term investments in BrazilPromote and develop long-term investments in Brazil 100+ including PE & VC managers, LPs, invested companies and service providers100+ including PE & VC managers, LPs, invested companies and service providers

4. PE&VC Economic Importance - USA Fonte: NVCA 4

5. 5 PE&VC Economic Importance - USA

6. 6 Source: Monitor Analysis Brazil: An Enabling Environment….. Attractive Investment Opportunities Viable Exit Options Favorable Macroeconomics Developed Institutional & Regulatory Landscape Developed Capital Markets World-Class Corporate Governance Qualified Human Resources

7. 7 Internal Debt and Interest Rates Slow legal system Limited funds for PE & VC Some companies still reluctant to good Corporate Governance Labor laws …..with typical challenges of emerging markets

8. 8 Investment Grade Stable economy de-linked from politics Falling interest rates and country-risk Social inclusion of low-income families Source:BACEN; Social Security Ministry; IBGE ; CVM; Interviews with PE / VC specialists; BOVESPA; ANBID; BEST Favorable Macroeconomics Enabling Environment…..

9. 9 Improvement in the recent years, today Brazil is stronger and less vulnerable to external crises. Investment Grade GDP growth; Inflation down, interest rates falling and trade surplus; International reserves are increasing and FDI is growing; Still needed adjustment of public accounts; Important legal and tax system reforms under discussion; The Federal Program, PAC (Growth Acceleration Plan), which projects to invest more than US$ 250 billion in the infrastructure sector in the next 5 years; Enabling Environment….. Favorable Macroeconomics

10. 10 Source: Social Security Ministry; CVM; Interviews; BOVESPA; Monitor Analysis Pension Funds Assets represents 16% of Brazilian GDP (2005) Alternative Investments mixed within the Equity and Real Estate classes Pension Funds may allocate up to 20% of total assets to alternative investments SPC Regulatory Review Pension Funds Assets (US$ billion) Developed Capital Markets Enabling Environment…..

11. 11 Stock Exchange Regulation Private Institution World-Class Corporate Governance Enabling Environment…..

12. 12 Source: BOVESPA; CVM; Brazilian Institute for Corporate Governance (IBGC) Stock Exchange Brazilian Securities & Exchange Commission Brazilian Institute for Corporate Governance Established in 1995 by demand from the market Develops and Recommends CG programs Advanced regulation on disclosure and shareholders’ rights = Public Companies and PE & VC Funds Most restrictive levels of CG represents 60% of the Market Cap and Daily Volume 3 levels of world-class corporate governance standards (1, 2 and ‘Novo Mercado’) ‘Novo Mercado’ Highest Corporate Governance requirements in BOVESPA Information disclosure and standards –IFRS or US GAAP Protection to minority shareholders –100% tag along –All stocks with voting rights –Minimum free float: 25% Mandatory use of arbitration Enabling Environment….. World Class CG

13. 13 Developed Institutional & Regulatory Landscape Enabling Environment….. Independent Institutions Legal System Financial Market Structure Coordinated Public and Private Efforts

14. 14 Source: ANBID; Bacen; BEST 2006; Brazilian Company for Custody and Liquidity (CBLC); CVM Note: *Except countries considered tax havens by Brazilian Tax Authority Legislation for investors fully reviewed (1999 / 2000) –Reduced legal and credit risk for investors –New “Bankruptcy Law” made investments safer Favorable tax regime* for foreigner investors Independent Institutions Legal System Financial Market Structure Solid and safe financial infrastructure: around 2,500 institutions Electronic payments system – compliance with BIS Brazil follows all 20 recommendations of G30 regarding custody, settlement, payments system and data security Central Bank and Securities Commission are autonomous Stock and Futures Exchanges are listed Enabling Environment….. Developed Institutional & Regulatory Landscape Coordinated Public and Private Efforts Fostering innovation and industrial development FINEP – Inovar Program BNDES – focused PE/VC department ABDI/MDIC – Productive Development Police (PDP)

15. 15 Experienced and skilled Fund Managers Wide availability of qualified Managers and other personnel for Portfolio Companies Qualified Human Resources Enabling Environment…..

16. 16 Source: ANBID; MCT; IBGC; FGV; Monitor Analysis Financial Mkt / Auditor High Executive Consultant Entrepreneur Other Extension Graduate PhD >20 yrs >15 yrs >10 yrs >5 yrs High School Undergrad Enabling Environment….. Qualified Human Resources

17. 17 Source: Monitor Analysis The Enabling Environment in Brazil Attractive Investment Opportunities Viable Exit Options Favorable Macroeconomics Developed Institutional & Regulatory Landscape Developed Capital Markets World-Class Corporate Governance Qualified Human Resources

18. 18 Attractive Investment Opportunities Source: MCT; Merrill Lynch; IBGE; Global Entrepreneurship Monitor; IDG; Monitor Analysis * US$ constant 2000 Sectors Regional Growth GNP (%) GNP (US$BB*) – logarithmic scale DF SE TO GO MT MS PA MA AM SC ES RS BA PR MG RJ SP Infrastructure - US$ 30 billion need Real Estate – Housing Deficit 8 million IT - US$ 19 billion in 2007 – IDG Biotechnology Tourism Telecom Retail Agribusiness –Biomass –Ethanol - 26 billion liter by 2010 –Green Beef –Grains –Arable land and favorable conditions

19. 19 Viable Exit Options 9% 242% 199% 40% 38% 36% 26% 22% 481% Construction Energy Sector Airline IT Medical Services E-commerce Airline Logistics Car rental Time to Exit 2 years 1 year <1 year 5 years 6 years 9 years 8 years 7 years 8 years Net Revenues 2005 (US$ million) 273 1,100 90 217 172 202 2,317 70 350 Equatorial Company GOL TOTVS 1 DASA Submarino Gafisa TAM ALL Localiza Investment (US$ million) 11 26 16 100 83 78 77 202 49 12% 130% 32% 20% IT Logistics Telecom IT 4 years 7 years 4 years 6 years n/a 137 35 3 n/a Akwan Autotrac Atrium Microsiga 2 n/a 2,5 20,5 7 IPOs Trade-Sale Estimated IRRs in US$ Source: Press Clippings; Company websites; Interviews; Monitor Analysis; Brazilian Capital Markets and Private Equity (R. Freitas, P. Passoni); Note: 1 BNDESPar; 2) Buyback; 3) 2004

20. 20 Source: Private Equity and Venture Capital in Brazil – 1st Census – FGV / GVcepe; ABVCAP; Monitor Analysis * Includes only fund managers that existed in 2004 1999 Future 8 managers in 1994 –Real Plan –Privatizations –Dot-coms Mostly investment banks Followed by: –Global VC/PE funds –BNDES (1996) Brazil = key market for international investors –Investment peak 45 managers in 2000 * Economic slowdown –Global factors:  Internet bubble burst  Argentina default –Local factors:  Devaluation (1999)  Energy crisis (2001)  Elections (2002) Small investments, no exits Int’l LPs divested too early Improvements in legislation and corporate governance Renewed interest in PE & VC –By local investors –By entrepreneurs Several successful IPOs New vintage of funds –local LPs More stable Economy –Falling interest rates –Falling country risk Positive impact of the institutional changes –Corporate governance –Legal improvements 2004 Mid 90’s Brazilian PE & VC Industry Brief History

21. 21 Limited Partners General Partners Companies US$ 16,72 billion of committed capital (Jul/07) 89 PE&VC firms 153 funds 984 professionals (357 partners) 404 portfolio companies 194 new investments between 2004 and 2007 28 IPOs between 2004 and 2007 Brazilian PE & VC Industry Main Figures

22. 22 Brazilian PE & VC Industry Impressive Recent Growth Source: GV-CEPE

23. 23 Brazilian PE & VC Industry Surprising updated figures to be released in two weeks

24. 24 Brazilian PE & VC Industry Attractive Pos-IPO Performance Source: GV-CEPE

25. 25 Brazilian PE & VC Industry Well Positioned Source: LAVCA

26. 26 an enabling environment for PE&VC with sound investment opportunities Favorable Macroeconomics Developed Capital Markets World Class Corporate Governance Developed Institutional & Regulatory Landscape Qualified Human Resources In different regions Across different sectors Consolidation of fragmented sectors Distressed assets Economic inclusion and viable exits IPO Trade Sale at attractive returns Conclusion Brazil offers

27. Thank You ! Luiz Eugenio Junqueira Figueiredo Chairman Associação Brasileira de Private Equity & Venture Capital www.abvcap.com.br