Market: recent developments and trends Cristiana Pereira Feb-9-12 - - PowerPoint PPT Presentation

Cristiana Pereira

Feb-9-12

The Brazilian Capital Market: recent developments and trends

The Brazilian exchange has become

• ne of the top capital raising markets…

Souce: BM&FBOVESPA.

17,8 IPO: 7 Follow on: 8 IPO: 9 Follow on: 10 IPO: 26 Follow on: 16 IPO: 64 Follow on: 12 IPO: 4 Follow on: 8 IPO: 6 Follow on: 18 IPO: 11 Follow on: 11 IPO: 11 Follow on: 11

Capital raised by share issues (BRL billion) 2010 – Petrobrás – biggest public offering in the world: in Brazil

4 , 3 8 , 5 15 , 1 14 , 5 26 , 8 22 , 2 63 , 2 10 , 7 4 , 5 5 , 4 15 , 4 55 , 6 7 , 5 23 , 7 11 , 2 7 , 1

2004 2005 2006 2007 2008 2009 2010 2011

Follow

• On

IPO Parcel related to the onerous cession - Petrobras offer 30 , 4 70 , 1 8 , 8 13 , 9 34 , 3 45 , 9 149 , 2 30 , 4 70 , 1 8 , 8 13 , 9 34 , 3 45 , 9 149 , 2 30 , 4 70 , 1 8 , 8 13 , 9 34 , 3 45 , 9 149 , 2 30 , 4 70 , 1 8 , 8 13 , 9 34 , 3 45 , 9 149 , 2

74 , 81

• Goal: reduce the distance between the regulation and the necessity to

protect investors

• Main requirements of Novo Mercado:
• Requirements of Corporate Governance: shareholders rights, transparency

and supply of mandatory information

• Adhesion to Market Arbitration Chamber to solve corporate conflicts
• Requirement to listing maintenance

... built with a creation of special Corporate Governance segments

• Novo Mercado is a private initiative, based
• n the self-regulation power of the

Exchange, in order to improve the quality of public companies and the credibility of capital market

• It creates a receptive environment for

public offerings

IPOs by Listing Segment*

Novo Mercado 75% Nível 2 13% Nível 1 6% BDR 6%

*Data from 2004 to July-07-2011.

Corporate Governance Index compared to IBOVESPA

(Base 1.000 - desde 25/06/2001) – fonte: BM&FBOVESPA

Índices IGC IBOV Jun/2011

• 2,32%
• 3,43%

Em 2011

• 7,08%
• 9,96%

Desde 2001 +608,90% 329,77%

• 1.000

2.000 3.000 4.000 5.000 6.000 7.000 8.000 9.000

IGC Ibovespa

• TelecomSector Index – ITEL
• Electric Power Index – IEE
• I ndustrial Sector Index – INDX
• Consumption Index – ICON
• Real Estate Index – IMOB
• Financial Index – IFNC

Broader range of sectors % of the market capitalization – January/12 Sector Indexes

New sectors (since 2004): car rental, information technology, toll roads and highways, pharmaceutical products, agriculture, sugar and alcohol, residential building construction, property agency, education services, medical services and stock exchange

Financial 26,4% Oil, Gas and Biofuels 16,5% Consumer Non Cyclical 15,1% Basic Materials 15,0% Public Utilities 9,9% Telecommunications 6,3% Construction and Transportation 4,7% Consumer Cyclical 4,1% Capital Goods 1,7% Information of Technology 0,4%

Growing Private Equity Industry in Brazil

0,1 0,5 1,3 2,9 2 2,3 7,2 32 23 31 33 15 29 68 10 20 30 40 50 60 70 80 1 2 3 4 5 6 7 8 2004 2005 2006 2007 2008 2009 2010 Volume (US$ Bilhões) Quantidade de Negócios Submarino, Localiza, Tam, Uol R$1,91 Bilhões Gol, Dasa, ALL R$1,90 Bilhões Vivax, Gafisa, Equatorial,CSU, Brasilagro, Lupatech, Abyara, Odontoprev, Dufrybras R$4,90 Bilhões PDG, GVT, Anhanguera, Even, Br Malls, Fer Heringer, Metalfrio, Bematech, Cremer, MRV, Springs, Providencia, Multiplan, Satipel, Laep, Tempo Part R$9,69 Bilhões Le Lis Blanc R$0,15 Bilhões Tivit, Cetip, Direcional R$1,62 Bilhões Aliansce, BR Propert, Mills, HRT, Raia R$5,39 Bilhões

Source: Veja and Advent International Notes: 2010: excluding investments out of Brazil (Burger King negotiation) 2007: excluding US$ 2,4 billions from investments on real estate sector and not private equity Negotiations without released value were not considered at volume, but were counted in the number of trades

Volume (US$ Billions) Number of trades Number of trades Volum (US$ Billion)

But we still have a lot of things to be accomplished...

Fonte: World Federation of Exchange (WFE).

Ranking WFE 23º

Number of listed companies in Stock Markets – 2011

466 476 545 593 746 773 773 777 824 931 940 1 112 1 229 1 411 1 496 1 640 2 079 2 220 2 291 2 680 2 886 3 276 3 945 1 000 2 000 3 000 4 000 BM&FBOVESPA Mexican Exchange The SE of Thailand Tel Aviv SE Deutsche Börse Singapore Exchange NASDAQ OMX Nordic Ex Warsaw SE Taiwan SE Corp. Shanghai SE Bursa Malaysia NYSE Euronext (Europe) Osaka SE Shenzhen SE Hong Kong Exchanges National SE India Australian SE NYSE Euronext (US) Tokyo SE Group NASDAQ OMX London SE Group BME Spanish Exchanges TMX Group

Opportunities in the Brazilian Capital Market...

Number of companies by size

Segment have been developed with a EDUCATIONAL presence.

3 thousand From 15 thousand to 20 thousand More than 3 million

• More than 1,000 employees
• Annual sales over BRL 400

million

• 250–1,000 employees
• Annual sales between BRL 20m-

400m

• Up to 250 employees
• Annual sales below BRL 20

million

BM&FBOVESPA initiatives with partners promoting lectures on IPOs in those some Brazilians cities

Salvador – BA Curitiba – PR São Paulo – SP

Alternative for a great number of companies, for all sizes and with gradual strategy in regard to access to the capital markets

+

Characteristics of companies seeking gradual access to the market

=

BM&FBOVESPA works to provide access to SME Companies...

BM&FBOVESPA’s Strategy Reach out to companies in all maturity levels

BM&FBOVESPA’s Strategy – examples Highlight small and medium companies

Ranking 2011

2.000 companies with annual revenues between R$ 18 million and R$ 300 million in 2010

Ranking 2010

1.000 companies with annual revenue between R$ 62,3 million and R$ 230 million in 2009.

BM&FBOVESPA’s Strategy – examples Connecting Companies to Investors – Pre-IPO Stage

FINEP* Agreement with BM&FBOVESPA

Meetings among investors and companies that could possibly make an IPO or receive VC / PE investments

• Scope of the event: coaching of hired consultant in structuring

the business plan of non listed companies. Executives from those companies will be trained to make presentation to institutional investors, banks, brokers and managers of venture capital

• Realized in November 8th 2011 with participation of 4 companies
• Presence: 55 people

– 18 representing investors – 29 representing banks and brokers – 7 others representing (non listed companies and audit firms)

* Research and Project Financing, also known as the Brazilian Innovation Agency, is a publicly

• wned company subordinated to the Ministry of Science and Technology – MCT

Cristiana Pereira

Fev-9-12

The Brazilian Capital Market: recent developments and trends in Brazil Capital Market