Censo FGVCepe

The Second Census of the
Brazilian Private Equity and
Venture Capital Industry

GVcepe
Private Equity and Venture Capital Research Center at FGV-EAESP
Prof. Cláudio V. Furtado

December 2010

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)

Copyright © 2010. Fundação Getulio Vargas - GVcepe.

Thanks to our Sponsors and Partners

Founding Members Project Sponsor

Strategic Partners

Institutional Sponsor

Comprehensive Research

80%
of the industry
surveyed

180 144
PE&VC
Managing Surveyed
Organizations


Industry Overview as of Dec. 2009

US$ 36.1 bn
Investors
Committed Capital

144 PE&VC Firms
General 258 Investment Vehicles
Partners Estimated 1,593 Professionals
and Staff

502 Portfolio Companies
Portfolio From 2005 to 2009:
Companies • 414 new investments
• 137 total exits
Copyright © 2010. Fundação Getulio Vargas - GVcepe. • 37 IPOs

Evolution of Committed Capital
Committed Capital in US$ bn
40
36
35
30 43%p.a. 27
29

25 CAGR 2005-2009

20
15
15%p.a. 13
CAGR 2007-2009
10 8
5 5 5 5 6
5 4

0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
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.

Expansion of the Asset Class
Committed Capital as % of GDP
3,0%

2,5%
2.3%
2x since 2004
2,0%
2.0%

1.8%
1,5%

1.0% 1.0%
1,0%
0.8% 1.2%
0.9% 0.9% 0.9%
0,5% 0.6%

0,0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
SOURCE: BACEN, GVcepe


Committed Capital Breakdown
Committed Capital by Investment Committed Capital by PE/VC
Vehicle’s Legal Structure Organization Category

Corporate
Corporate Other 7% Ventures
Ventures 1% Limited 1% Public Sector
Partnership Subsidiaries of
Financial 3%
Direct 37%
Institutions
Investment 17%
15%

Public Sector
Holding 4% Organizations
8%

CVM* 26%

Private Sector
* All vehicle structures according to Brazilian PE/VC regulation CVM 391, 209, 402
Organizations
71%


Committed Capital Breakdown
2008 (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%
Dec. 08 (In US$ MM) 28,984
Fundraising (Vehicles in US$) 3,093
2009 (US$ MM) Private Gov. Total %
Fundraising (Vehicles in R$) 2,979
Traditional * 27,168 935 28,103 78%
Reductions (Vehicles in US$) -1,531
Corporate Venture ** 350 - 350 1% Reductions (Vehicles in R$) -732
Infrastructure *** 3,955 - 3,955 11% Exchange Rate Effect 3,318

Real Estate 2,734 - 2,734 8% Dec. 09 (In US$ MM) 36,112

Timber 970 - 970 3%
Total 35,177 935 36,112 100%
* 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.

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%

* Global and Regional vehicles declaring increase (or decrease) of committed capital allocated to Brazil.
NOTE: Direct Investments are those made directly by the PE/VC organization; no fund structure.


Investment and Fundraising
Investment x Fundraising (in US$ bn)
8,0
7.2 0.5%
7,0

6,0 0.4%
0.5%
5.3
6.1
5,0 4.60.3%

4,0 0.2% Fundraising
2.80.2% 3.3 0.2% 3.1
3,0 Investing
0.3%
2.3
2,0

1,0
n/a n/a
0,0
2005 2006 2007 2008 2009
NOTE: The percentage represents each year’s GDP by either PE/VC committed capital raised or invested in Brazil.
SOURCE: BACEN, GVcepe


Diversified Fund Investor Base
Multilateral
Institutions Government
Insurance 1%
Companies and Public
Banks
1% Institutions
4%
4%
Private
Pension Companies
Funds 22% 5%

Others 5%

Funds of
Funds 6%

Parent Investment
Organization Funds 6%
18%

Family offices
9%

Trusts and PE/VC
Endowments; Organization
10% Partners
9%
NOTE: Parent Organization includes Corporate Ventures and Banks’ captive PE/VC subsidiaries


Deal Flow Sourcing
Proprietary Referrals

PE VC PE VC

Own PE/VC Organization 39.0% 37.0% Incubators/Tech Parks 0.3% 13.1%

Incubators/Tech Parks - 5.0% Investors (LPs) 1.9% 10.0%

Startup/BPlan Competitions - 7.0% Other PE/VC Organizations 5.0% 3.8%

Seed/VC Forum FINEP - 5.8% Consultants/Auditors/
30.8% 5.4%
Advisors/Brokers
Business Rounds - 2.3% Law Firms 4.7% 5.8%
Competitors of Portfolio
0.1% 2.7% Banks 8.4% -
Companies
Customers/Suppliers of Portfolio
7.2% 15.8%
Porfolio Companies 1.5% 2.7% Companies/Entrepreneurs

Others 44.8% 46.2%
Media News
5.6% 4.7%
Total 100% 100%
Others
44.4% 33%

Total
100% 100%


INVESTMENTS AND
PORTFOLIO COMPANIES

Investments by Stage and Type 2009

Number of Investments Average Ticket by Stage of Company
(Includes New and Follow-on Investments) Development (US$ MM)

3% 1% Stage Average Ticket
4%
5% Seed/Start-up 0.42
41%
Private Equity Venture Capital 4.41
15% Venture Capital Greenfield 46.64
Seed/Start-up Mezzanine 50.22
Greenfield Distressed 64.37
PIPE
Private Equity 73.41
Distressed
31% PIPE 91.77
Mezzanine
Total 39.39
Sample of 95 investments (100%)
Sample of 77 investments (81%)


Number of Investments by Sectors
of Economic Activity
2005-2008 vs. 2009 (Includes New and Follow-on Investments)
15%
IT and Electronics 18%
Energy and Oil 15%
11%
Pharmaceutical/Medical/Aesthetics 14%
8%
Agribusiness 11%
7%
Various Industries* 9%
6%
Various Services** 8%
Transportation and Logistics Services 6%

Biotechnology 5%
3% 2009
Retail 4%
4%
2005-2008
Financial Services
Entertainment/Tourism 4%

Civil Construction/Real Estate 4%

Education 3%

Extractive Industries 2%

Food and Beverages 2%

Infrastructure - other 1%
Communication 1%

* Various Industries: E.g.: Chemicals, Mechanicals, Electric, Metallurgic, Packaging, Textiles. Sample 2005-2008: 394 investments
** Various Services: E.g.: Call Center, Consulting. Sample 2009: 95 investments

Value of Investments by Sectors of
Economic Activity
2005 - 2008 (Includes New and Follow-on Investments)

Retail 12%
Financial Services 11%
Energy and Oil 4%
Education 4%
Communication 4%
Agribusiness 3%
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.

Value of Investments by Sectors of
Economic Activity
2009 (Includes New and Follow-on Investments)
Energy and Oil 54%
39%
10%
9%
6%
5%
5%
Education 6% Including all investments
3%
Agribusiness 4%
Excluding one US$ 0.765bn
Various Services** 2% investment in energy
Pharmaceutical/Medical/Aesthetics 1% transmission

Retail 1%




Sample 2005-2008: US$ 6.3 bn: Transportation and Logistics Services, Biotechnology and Various Services represent less than 1% each
Sample 2009: of 95 investments (100%) with a total value of US$ 3.1 bn. Communication and Biotechnology represent less than 1% each

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 .

Frequency of Portfolio Companies
by Stage 2009

PE - Growth 36,5%

VC - Early Stage 20,9%

Start-up 13,1%

Seed 7,6% 2009

PE - Later Stage 6,9% VC; 47%
PE Gr; 36.5%
PIPE 6,2%
PE Lat; 6.9%
VC - Later stage 5,0% Other; 10.1%

Mezzanine 2,1%

Greenfield 1,6%

Distressed 0,2%

NOTE: The sample contains 502 companies, of which 436 companies reported information about the stage of the company in 2009 .


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 by Sector
Divestitures by sector of economic activity (2005-2008 vs. 2009)
27%
6%
4%
Energy and Oil 8%
5%
8%
Various Services** 5%
2%
Education 5%
2%
3%
5% 2009
Communication 9%
3% 2005-2008
3%
Retail 4%
3%
Biotechnology 4%
Infrastructure 1%


Agribusiness 4%

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.


Exits: Numbers of divestments by
Stage
Divestitures 2005 - 2008 Divestitures 2009

Distressed
Greenfield
2%
Seed PIPE 5% Start-up
3% Start-up 2% 2%
PIPE 5% Mezzanine VC - Early
19% 5% Stage
27%
Mezzanine VC - Early
3% Stage
27%

VC - Later
Stage
PE - Later PE - Later 5%
Stage PE - Stage PE -
23% Growth 37% Growth
18% 17%

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.


Exits by Mechanism
Divestitures between 2005 and 2008 Divestitures in 2009
by exit mechanism by exit mechanism

Write-off
IPO Write-off IPO
7%
11% 10% 17%
Buyback
18%
Buyback
20%
Public Trade Sale
Secondary 29%
Sale
3%

Public Trade Sale
Secondary 28%
Private
Secondary Sale
10% Private
Sale
32% Secondary
Sale
15%
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: Mgrs & Investors –
Lifetime and limitations for new funds

Possibility of fundraising for a new
Limited
investment vehicle before exiting the CVM Type Holding Other Total
Partnership
current vehicle
Not 7 - 2 - 9
Yes, at any time 31 9 7 4 51
Yes, but only after the investment period of
14 1 6 - 21
the vehicle

Yes, but only after the vehicle has invested
a certain percentage of its commited 18 1 12 2 33
capital
Total 70 11 27 6 114

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%

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
25 7.4%
Organization
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.


Term Sheet Conditions
2004 2009
Decision models for investments and divestitures approval
# 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.

LP’s right to co-invest in
CVM Holding Direct Investment Limited Partnership Other Total
portfolio companies

Yes, it’s a fully guaranteed right 35 5 2 11 - 44

Yes, but only under certain
24 5 - 9 4 36
conditions
No. The investors are forbidden to
directly co-invest in any of the 17 2 - - - 16
porfolio companies
Other 13 - - 6 1 15
NOTE: Response from 111 vehicles.
Total 89 12 2 26 5 111


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
39 9.2%
and recommendation of investment opportunities
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
47 11.1%
to Investors (LPs)
Permanent specialized consulting services to support operations (eg. Tecnology, Biotechnology
26 6.1%
consultant etc.).
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.


Management Fee Levels

Management Fee
PE/VC Organization is both Manager and PE/VC Organization is only the Manager of
2004 Administrator the Vehicle (2009)
of the Vehicle (2009) (Administrator is a third party)
Fees (%)
Committed Committed Committed
# of # of # of
% Capital % % Capital % % Capital %
vehicles vehicles vehicles
(US$ MM) (US$ MM) (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).


Management Fee’s Calculation Basis

Administrator Manager
Basis of Management Fee 2004 (2009) (2009)
No. of No. of No. of
During Investment Period After Investment Period % % %
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.


Carried Interest & Hurdle Rate

2004 2009
Index Rate (%) No. of No. of
% %
vehicles vehicles

10 or + 3 3% 6 6%
IGPM 6 < x < 10 8 8% 6 6%
6 or - 19 20% 13 12%
10 or + 4 4% 20 19%
IPCA 6 < x < 10 0 - 25 24%
6 or - 0 - 11 10%
INPC 6 to 12 4 4% 7 7%
10 or + 3 3% 1 1%
US$ 6 < x < 10 8 8% 4 4%
6 or - 4 4% 1 1%
Other 6 6% 8 8%
38 39% 3 3%
N/A
Total 97 100% 105 100%


Carried Interest &Timing
2004 2009
Performance Fee Administrator Manager
(%)
# of # of # of
% % %
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%

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%


Governance: Business Environment

Quality of Corporate Governance perceived by the PE/VC Organization

Received proposals

Very Low
Analysed proposals
Low
Medium
Selected proposals before investment
High
Very high
Selected proposals after investment

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

NOTE: Sample of 82 PE/VC organizations.


Governance: Business Environment –
The Value of Governance
Premium over investment cost PE/VC organizations are willing to pay
Arithmetic Std. Deviation Minimum Maximum
Stage
Average (%) (%) (%) (%)
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%

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
Arithmetic Std. Deviation Minimum Maximum
Stage
Average (%) (%) (%) (%)
Total 16.2% 9.4% 0.0% 30%



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
Common stocks with subscription rights (warrants) 2%
Redeemable common stocks 4%
Other 8%
Debt instruments 29%
Prefered stocks 31%
Plain common stocks 65%

Governance: Port. Cos. –
BoD Composition
Port. Cos. Members by Average Age
(%) of Total
BoD Membership category (years)
Inside 110 55.3% 46.1
Outside 57 28.6% 41.2
Independent 32 16.1% 42.1

NOTE: Sample of 40 investee companies.
Outside Independent
Background
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 104 investee companies.

Governance: Port. Cos. –
BoD Composition

Executive officers, participation on BoD and shareholding
Portfolio Companies
% of members of the Board % of shareholders
Executives as Inside Directors
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%
NOTE: Sample of 49 investee companies


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
Managing Partner of the
Strategic CEO / President Board of Directors Members
PE/VC Organization (GP)
Research & Development CEO / President Board of Directors Members
Risk CEO / President
Nomination / Managing Partner of the
Board of Directors Members CEO / President
Remuneration PE/VC Organization (GP)
Human Resources CEO / President Board of Directors Members
Audit Financial Director Board of Directors Members
IT Financial Director CEO / President
Legal External Consultants Board of Directors Members
Finance Financial Director
Marketing CEO / President Board of Directors Members
Acquisitions/New Managing Partner of the
CEO / President Board of Directors Members
Businesses PE/VC Organization (GP)
Industrial Operation CEO / President Commercial Director

NOTE: Sample of 17 investee companies


Governance: Port Cos –
BoD Compensation and Performance
Remuneration of BoD members

Remuneration
Are members paid? 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%
NOTE: Sample of 25 PE/VC organizations

Performance Evaluation of key persons
Is there performance evaluation?
Key persons Formal Informal No
Members of the
3.6% 14.3% 82.1%
board
CEO 54.5% 15.2% 30.3%
Executive
55.9% 14.7% 29.4%
Officers



Governance: Fd Mgrs & Port Cos –
Veto Power by minority fund managers
Minority Fund Managers’ Veto Power
Yes
Other 22,727%
No Key person hiring 40,909%
Payment of bonuses to executives 50,00%
39% Dividends 54,545%
Estrategic Planning 68,182%
Annual Budget 86,364%
61%
Indebtedness 86,364%
Capital Budget 90,909%
Acquisitions 95,455%
Merger 95,455%


Incentives and/or penalties related to the executives performance
Loss of control by the entrepreneur 0%

Positive adjustment in the percetage
12.5%
of participation

Replacement of key executives 25%

Earn-out 50%

Stock Options 56.3%

Copyright © 2010. Fundação Getulio Vargas - GVcepe. NOTE: Sample of 16 PE/VC organizations

Governance: 100 Day Plan
Main disruptions in the First 100 Days
Yes
No

41%

59%

NOTE: Sample of 32 PE/VC investee companies
Others 10.5%
Resolution of environmental contingencies 26.3%
Full redesign of business model 31.6%
Supply Chain 31.6%
Resolution of tax, labor and / or social… 36.8%
Marketing Strategy 52.6%
Structure of Human Resources 57.9%
Financial Strategy 57.9%
Management Control 63.2%
Copyright © 2010. Fundação Getulio Vargas - GVcepe. NOTE: Sample of 19 PE/VC investee copanies

Governance:
100 Day Plan
Leadership Main Reasons
PE/VC Organization 04%
(GP) Partner or
Manager Responsible Other 10.5%
for the Deal
13%
Review of Goals
Occurrences
Need for involving
"First 100 days"
management task 29% all hierarchical 21.1%
force composed by levels
31% Invested Company's
and PE/VC
Organization (GP)`s
69% members Competitive
environment 31.6%
Yes Others
change
No
Need for
54% proprosing more
challenging targets 47.4%
NOTE: Sample of 32 PE/VC investee companies to the investee
PE/VC Organization
(GP) Partner or company
Manager not
Responsible for the NOTE: Sample of 19 PE/VC investee companies
Deal

NOTE: Sample of 24 PE/VC investee companies

Governance:
Monitoring Activity
Time spent by PE/VC Organizations on monitoring*
250

200 193

150 144

100
80
69
58 63

50 41 42 39

7 8 12 7 12
6 6
0
Participation on the Board of Participation in the technical Members of the PE/VC Total
Directors committees of the Board of Organization (GP) allocated
Directors to the team of the invested
company
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


Governance:
Monitoring Activity
Direct contact with executive officers of portfolio company*:

HR Director 16%

Marketing Director 16%

IT Director 18%

Others 24%

Industrial Director 26%

New Business and Expansion Director 29%

Chief Controller 32%

Commercial Director 39%

Chief Administrative Officer / CFO 87%

CEO / President 97%

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
Making dreams...


The Road Ahead
... Come True!!!


The Road Ahead
PE/VC Portfolio Companies
Geographic Distribution Incubators and Tech Parks

Source: Plonski (2009)


Closing the Gap: Potential for PE/VC investment in
innovative opportunities

PE/VC Portfolio Companies
Geographic Distribution Incubators and Tech Parks



Educating Entrepreneurs on PE/VC
The FGV & ABDI Initiative


PE&VC Portfolio Companies in 24/26 Sectors

4/6
Programs in Strategic Areas

Complexo Tecnologias de
Health Industrial Communications Nuclear Defense
Industrial da
Complex Informação e Nanotecnologia
Nanotechnology Biotecnologia
Biotechnology
and IT Energy Industry
Saúde Comunicação

Programs to consolidate and expand leadership
7/7

Petróleo,
Oil,
Aerospace
Complexo Pulp and Chicken and
Aeronáutico
Industry
Natural gas and
Gás natural Bioethanol
Bioetanol Mining
Mineração Steel Beef
e Petroquímica
Petrochemicals Paper

Programs to strengthen competitiveness
13/13
Higiene,
Automotive Textile and Lumber and Personal Care Civil Complexo de
Capital goods Perfumaria Construção Civil Services
Industry Clothing Furniture and Cosmetics Construction Serviços
e Cosméticos

Leather and Education and
Shipbuilding
Footwear
Agroindústrias
Agribusiness Biodiesel
Biodiesel Plastics OUTROS
OTHERS

Source: GVcepe and ABDI - Productive Development Policy (PDP)

Brazil, the country of the future is now!


Censo FGVCepe

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