3. Deal Rationale
Consolidate PDG as a market leader in launching volume in the lower and middle-lower
income segment
Investment opportunity in segment with the largest repressed demand
Company with considerable growth potential and proven execution capacity
Accretive valuation
Arbitrage opportunity on discounts between listed companies versus private equity
investments
Validate and ground the strategic alignment between the current shareholders of Goldfarb
and PDG Realty
3
4. PDG Realty increases its stake in Goldfarb
The company has over 40 years of experience and is one of the largest developers and
homebuilders in the metropolitan area of Sรฃo Paulo focused in popular and economic units
Successful business model based in 3 main principles :
โ Focus in market segment (popular and economic units)
โ Standardization of the development process resulting in low operational costs
โ Production and sales verticalization
One of the largest Caixa Econรดmica Federal associative credit operators
The company owns a exclusive brokerage firm (Avance) with approximately 100 brokers,
one of the largest in Sรฃo Pauloยดs metropolitan area
In 2007, Goldfarb expects to launch between 5 and 6 thousand units, reaching 10
thousand units in 2009.
4
5. PDG Realty increases its stake in Goldfarb
Unlike most players, Goldfarb is exclusively focused in the market segment that
concentrates the biggest and most promising consumer demand (popular and economic)
Number of Residences (2006) Main Competitors Positioning
Habitational
Deficit
1.7 million 4% > 20 mmw
3.7 million 7% 10 < > 20 mmw
8.7 million 18% 5 < > 10 mmw
37.3 million 71% <5 mmw
Total Residencies: 51.6 millions
5
6. Acquisition Structure
Equity acquisition of 21% of Goldfarb through capital increase and equity purchase from
remaining partners
To be paid as follows:
โ Capital increase of R$80 million, subscribed solely by PDG
โ Acquisition, by PDG Realty, of a holding company which owns 12.5% of Goldfarbโs
capital stock, by the issuance of 5,040,000 PDGยดs shares to be subscribed by the
remaining shareholders of Goldfarbโs
โ A lockup period of 3 years for this PDGยดs shares, with quarterly proportional sales of
up to 8.33% of total position
โข Following the aquisition PDG Realty will hold 70% of Goldfarbยดs total shares
6
7. Acrretive Valuation
PDG Realty (as of 30/04/07)
# of shares 110.652.081
Price per share R$ 14,10
Market Cap. R$ 1.560 million
Estimated P/E 2008 x * 8,6
Goldfarb Deal
Net profit estimate for Goldfarb for 2008 R$80 million
Goldfarb estimated P/E 2008 x 6,1
Peer Comparison: Rodobens estimated P/E 2008 x * 11,3
Discount
Discount
Private equity vs. PDGR3
Private equity vs. RDNI3*
P/E โ08 17,5 x
Rodobens PDG
Discount
2,5x
Discount P/Eยด08 Goldfarb P/Eยด08
5,2x 11,3x 8,6x
P/E โ08 P/Eยด08
5 ,6x
P/Eยด08
Goldfarb P/E โ08
6,1x
5,6x
P/E โ08 5x
6,1 x
* * Based on the market expectations and PDG Realty evaluations when referred to Goldfarb
7
8. PDG Realty presents an unique business model on the
Brazilian Real State market.
Coverage in all income segments with leading brands
Market Segmentation: residential development, land parcelling and
Diversification Strategy income oriented projects
Geographic Presence: 26 cities in 3 states (SP, RJ e BA)
Strong presence on the low-income segment
Steady landbank expansion since the IPO
Growth Perspectives
Development capacity fueled by partnership business model
โWhite Labelโ real state PDG Realty is not perceived on the market as a competitorโฆ
company โฆ because it brings a complementary expertise to its partners
Alignment of interests between shareholders and management
Unique return-oriented
corporate company Business Model allows โhiringโ the best management in the real state
market
8
9. Proven track record
Deal flow guarantee: landbank (PDG Realtyโs share) amounts to R$ 2.3 billion
Potential capital gains: Following a private equity model, PDG will encourage and help its invested
companies to grow and access capital markets.
Additional
acquisition
JV of 21%
JV
Set-06
Acquisition
Private Equity and... of 20%
Acquisition of stake
40% stake
Additional
Feb-06 acquisition
JV
of 10%
April-07
May-06 Nov-06 Feb-07
5 projects launched 28 projects launched
Founding 2004 12 projects launched
2006
2003 1ยบ Q/2007 ...co-development
2 projects launched IPO investments.
9 projects launched
2003 2005
Jan-07
9
10. Portfolio Investments
Even in a competitive environment PDG Realty was able to make important acquisitions in accretive
deals
PDG Realtyยดs track record proves its ability to continuously originate co-developments and private
equity opportunities
Middle to high Rental Income
Low Income Land parceling Services
income Properties
JV
Part.: 70% Part: 17%
Focus: Sรฃo Paulo and Rio de Focus: Sรฃo Paulo Part: 17% (indirect) Part.: 50% of joint venture
Janeiro Focus: Sรฃo Paulo Focus: Sรฃo Paulo Part.: 20%
Focus: Rio de Janeiro
Part: 50%
Focus: Rio de Janeiro
Part AVANCE.: 49%
Focus: Sรฃo Paulo and Rio de
JV Janeiro
Part: 50% of joint venture
Focus: Bahia
10
11. Closing Remarks
Flexibility to capture a large range of investment opportunities and
Flexibility market trends
Expertise and capacity to invest in different:
โ Geographic regions
Diversification โ Markets
โ Income segments
Count on the best
Ability to โhireโ the best management in the industry and leverage on
management teams in their specific and local knowledge
the industry
Additional capital gain Capital gain potential from portfolio investments since PDG will help its
potential invested companies to grow and access equity capital
Management with strong real estate expertise, financial background
Management expertise and return oriented culture to implement PDG Realtyยดs business
strategy
The right platform to accomplish a sustainable long term growth
Unique business model in the Brazilian real estate market 11
