» Purpose

Select funds, through BNDESPAR, in Private Equity shares - FIPs (*) – and Venture Capital shares - FIEEs (**), totaling eight FIPs and two FIEEs, with the following purpose: 

expand, through investment funds, the support to capitalization of business corporations of different sizes, also spreading out good governance practices and the risk capital culture in Brazil; and 

leverage private investors’ support to projects in the sectors prioritized by BNDES System. 

(*) Private equity funds are those intended to mid and large-sized companies/projects regulated by the Brazilian Securities and Exchange Commission’s Instruction nº 391, of July 16, 2003, and further amendments.

(**) Venture capital funds are those intended to emerging companies, as defined in the Brazilian Securities and Exchange Commission’s Instruction nº 209, of March 25, 1994, and further amendments.


» Term of Loan

07.08.2010


» Budget

R$ 1.5 million 


» BNDESPAR's Level of Participation

Private equity funds: Up to 20% (twenty per cent) of the committed equity; 

Venture capital funds: Up to 25% (twenty five per cent) of the committed equity; 


» Types of Spread

Management fee 

For funds with committed equity equal or higher than R$ 200 million, the management fee will be up to 1.5% p.a. on the committed equity or R$ 4,000 thousand/year; 

For funds with committed equity equal or higher than R$ 100 million and lower than R$200 million, the management fee will be up to 2.0% p.a. on the committed equity or R$ 2,500 thousand/year; 

For funds with committed equity equal or higher than R$ 60 million and lower than R$100 million, the maximum management fee will be up to 2.5% p.a. on the committed equity or R$ 1,800 thousand/year; 

For funds with committed equity equal or higher than R$ 30 million and lower than R$60 million, the management fee will be up to 3.0% p.a. on the committed equity; 

In the investment period, the management fee may be applied on the committed equity, and must then, be applied on the shareholders’ equity or capital invested in the fund, minus disinvestments and repayments made over time. 

For funds with committed equity equal or higher than R$ 200 million, BNDESPAR, even after selecting the Manager, may, in the due diligence phase, request the budget of monthly expenses to be covered by the Fund’s management fee. As a result, it may place its share in the fund contingent upon the decrease of the said fee. 

Performance Fee

It will be 20% of the gains distributed by the funds exceeding the original capital invested, restated by the variation of an inflation index (INPC, IPCA (Extended Consumer Price Index), etc.), plus an opportunity cost. The performance fee amount will derive from the following formula:

Tp = (Va - (Cc - Vp)) x 20%

where:

Tp = Performance Fee;
Va = The amount distributed to the shareholders for the purposes of repayment or upon settlement of the Fund;
Cc = Cost of subscription of shares of the Fund, restated, on the pay-up date up to the calculation date, by the variation of a pre-defined inflation index, plus an opportunity cost;
Vp = Sum of the amounts distributed to the shareholders, restated since the date of its distribution up to the calculation date, by the variation of the same inflation index applied upon the restatement of Cc, plus an opportunity cost limited to the Cc amount.

Performance fees will only be due when the result of the formula above is positive. The fee is also contingent upon the paying-up of the entire committed equity of the Fund or after the end of the investment period, whichever comes first. 


» First call : Approval of Private Equity Funds

On September 2, 2008, the Capitals Market Committee approved the choice of three best scored private equity funds selected in the categories agribusiness, bioenergy and governance. The funds were Brasil Agronegócio (Manager: BRZ Investimentos S.A.), FIP Terra Viva (Manager: DGF Investimentos) and CRP VII (Manager: CRP Companhia de Participações). 

Among the funds selected, the Private Equity Investment Fund Terra Viva has been approved by the BNDES’ Directors and is currently under operation, while the other two, BRZ Agronegócio and CRP VII, are under final analysis by the Venture Capital Division. Other investors for the fund are also being attracted.

These funds were classified as eligible by the BNDES’ Eligibility Committee, on August 8, 2008, and are eligible to continue in the process by means of the regulatory procedures and will be subject to more detailed analysis within the scope of the proposal, as well as the Fund Regulations and other legal documents, that are expected to be made effective by the BNDES’ Venture Capital Division within sixty (60) days, as of the date such news is communicated. Should the analysis conclude in favor of financial collaboration, the conditions will be submitted to the BNDES’ Directors for approval. 

Following calls will be carried out based on previous assessment at the BNDES, at the time of the call, of market opportunities and of the priorities of the BNDES’ Ssytem. 


» Second Call: Selection of Forest Asset Fund

The BNDES’ public call to choose a manager for Private Equity Funds focused on forestry assets is in underway. The bid submission term ended on 07/17/2009. The winning bid is yet to be chosen.

Such investments cannot cover native forest deforestation and must include the recovery of Legal Forest Reserves (RL) and Permanent Preservation Areas (APP), besides generating employment opportunities for the local workforce. 

A share of the fund’s equity – to be defined in the fund’s rules – will be earmarked for projects implemented in degraded areas.


» Third Call: Selection of Fund for the Oil and Gas Sector

The BNDES made a third public call to bid aimed at selecting a Private Equity Fund for the Oil & Gas sector. The deadline to submit bids ended on August 28, 2009.

On November 03, 2009, the BNDES’ Capitals Market Committee approved the Private Equity Fund for the Oil & Gas sector (Manager: Modal Administradora de Recursos S.A.) which scored highest among the participants bidding in the Third Call to Bid for the Investment Fund Program. This will be the second private equity fund focused on the Oil & Gas sector in which the BNDES will hold an interest.


» Fourth Call: Selection of Venture Capital Fund for Biotechnology and/or Nanotechnology Sectors

The Program's fourth public call to bid aims at selecting a Venture Capital Investment Fund in both or either of the Biotechnology and the Nanotechnology Sectors.

On December 14, 2009, the BNDES’ Capitals Market Committee approved the Private Equity Fund for the Biotechnology and/or Nanotechnology sector (Manager: Burrill Brasil Investimentos Ltda.) which scored highest among the participants bidding in the Fourth Call to Bid for the Investment Fund Program. This Private Equity Fund will be analyzed for approval by BNDESPAR’s Board of Directors.


» Criteria for the selection of funds

Eliminatory Criteria

Non-alignment of the model and/or focus of investment of the fund with BNDES’ priorities defined in the said call, through the Program; 

Litigations before the Brazilian Securities and Exchange Commission, institutions controlled, direct or indirectly, by the Federal Government, or other institutions that the BNDES System, at its sole discretion, considers impeditive in the selection process; 

Spread proposed by the manager not consistent with the fees defined in the Program; 

RECEIPT lower than 3.0 in the classification criteria; 

Classification Criteria

Each manager who submits proposals to BNDESPAR will be assessed according to the classification criteria below, to which the following weights apply: 

Fitness and experience of the team in the sector/subject-matter of the fund - weight 4; 

Experience of the tea, in capital market operations - weight 3; 

Team’s joint work background - weight 2; 

Governance model of the manager and the fund (decision-making structures, information management, transparency, conflicts of interest, etc.) - weight 2; 

Presentation of potential businesses: Presentation of project portfolio or potential companies for potential Fund investments - weight 3; 

Participation of manager as a shareholder - unit 1; 

Capability of attracting investors for the Fund - weight 2; 

Management fee (cost related to the others) - weight 1; and 

Performance fee (cost related to the others) - weight 2. 

Total of 20 points 

The grades for the classification criteria will range from 1 to 5 and the FINAL GRADE will be the weighted average of these criteria. 

Notes:
Managers who present the smallest absolute value will be assigned grade 5.0 and Managers who present the highest absolute value will be assigned grade 1.0, resulting from the application of the management fee (percentage on the equity) on the reference base. The grades to the other competitor Managers will be calculated by a linear interpolation between the maximum and minimum limits. 

The grade will be divided in two parts with equal weights (50% for each part). In the first part, related to the opportunity cost, grade 5,0 will be assigned to the Managers who present the highest percentage value of the opportunity cost and grade 1.0 for the Managers who present the smallest percentage value of the opportunity cost. The grades to the other competitor Managers will be calculated by a linear interpolation between the maximum and minimum limits. In the second part, related to the performance fee percentage, grade 5.0 will be assigned to the Managers who present the smallest percentage and grade 1.0 will be assigned to the Managers who present the highest percentage. The grades to the other competitor Managers will be calculated by a linear interpolation between the maximum and minimum limits. 

The FINAL GRADE is calculated by the formula



Where pi is the weight of the i-th item and ni is the respective grade. 


» Application

The proposals from managers intending to take part in investment fund calls must be independently formulated and sent to Previous Inquiry for Private Equity Funds, in accordance with the Information Guide for Emerging Companies Investment Funds Selection and Classification, to:

BNDES - The Development Bank
Planning Division - AP
Department of Priorities - DEPRI
Av. República do Chile, 100 - Protocolo - Térreo
20031-917 - Rio de Janeiro - RJ 

After submitting the Previous Inquiry for Private Equity Funds to the BNDES, the Manager and his/her team will be invited to present the proposal to the BNDES Securities Committee, on a date yet to be defined. Proposals will be evaluated in accordance with the aforementioned qualification and classification criteria.


(1) In Brazil, a Legal Reserve is an area located in rural regions other than those permanently preserved, aimed at promoting the sustainable use of natural resources, protection of biodiversity and native fauna and flora.