Capital Markets and M&A in Latin America

Transcription

1 Capital Markets and M&A in Latin America 10th Annual LABA Conference Latin America: Growth Perspectives in a Shifting Political Landscape Bernardo Parnes Chief Executive Officer - Banco Bradesco BBI S.A. March 28th 2008

2 Latin America Undeniable economic progress within the region Latin American Selected Economic Indicators GDP Growth 2000 Mexico 6.4% Brazil GDP Growth % % % CPI CPI % % % % GDP Growth Chile GDP Growth Argentina % % % % CPI CPI % % % % Source: IMF 2

3 Latin America: Brazil leads the way The Brazilian stock market stands out Latin America Main Stock Exchanges February 2008 USD Billion Country Market Cap (1) Brazil Market Cap (1) / GDP (2) ADTV (3) Companies Listed (1) , x Mexico x Chile x Argentina Argentina x Source: World Federation of Exchange Members. (1) February 29 th, 2008 (2) GDP as of 2007 (3) Average Daily Trading Volume 3

4 Latin America: Brazil leads the way The Bovespa Stock Market Index appreciated considerably in 2007 LatAm Major Stock Indexes YTD % Brazil IBOVESPA Mexico +11% IPC Chile +6% IPSA 100 Argentina IPSA 90-3% 80 1/3/05 3/1/07 3/1/08 1/2/07 6/2/07 11/2/07 3/18/08 Source: Bloomberg and Economática Brazil IBOVESPA Mexico IPC Chile IPSA Argentina Merval 4

5 The Transformation of the Brazilian Economy Key macroeconomic variables have dramatically improved in the last few years Brazil Economic Indicators Real GDP Growth (%) Reserves and External Debt (USD billion) 0.3% 0.0% 4.3% 1.3% 2.7% 1.1% 5.7% 3.2% 3.8% 5.4% International Reserves External Debt Consumer Price Index (%) Exchange Rate (BRL per USD, year-end) 980% 6.0% 7.7% 12.5% 9.3% 7.6% 5.7% 3.1% 4.5% % Source: IBGE, FGV, Brazilian Central Bank and Bradesco Economics Department 5

6 A solid economy supported the development of Capital Markets in Brazil Country risk was reduced, attracting foreign investors to the local equity market Brazil - Equity Market Performance, Interest Rates and Country Risk YTD 70 3, , BOVESPA Index (thousand) Country Risk bps 2,000 1, , Investor confidence in emerging markets is considerably reduced Investors return to emerging markets as these countries continue to show improved macroeconomic stability As interest rates decrease, the stock market gains momentum International Crisis Foreign Investment in Brazilian Equities Source: Bovespa, Ipeadata and Bradesco Economics Department Brazilian Stock Market Index (IBOVESPA) 6 Country Risk (EMBI+Brazil)

7 More companies than ever have tapped the Brazilian Stock Market Over the last five years, the amount raised through equity offerings increased 13 fold Brazil s and Follow-ons YTD US$ 37,113 mm 74 deals US$ 14,352 mm 42 deals US$ 5,552 mm US$ 2,813 mm 18 deals 13 deals US$ 653 mm 3 deals US$ 198 mm 2 deals 2003 Source: Economática

8 New companies, new industries The newcomers have brought a fresh taste and increased sector diversity in the stock market Equity Offerings Breakdown by Industry Energy Utilities 8% Capital Goods 8% Healthcare 8% Transport and Logistics 15% Infrastructure 15% Finance 16% Petrochemical 15% Consumer 15% Telecom 3% Capital Goods 3% Pulp, Paper and Wood 3% Healthcare 4% Food and Beverages 5% Education 5% Consumer Goods 5% Transport and Logistics 5% Agribusiness 8% Other 3% Real Estate 31% Finance 25% Source: BOVESPA 8

9 Growing M&A Activity Brazilian FDI has increased significantly, fueling M&A deals Brazil - FDI USD Billion M&A Deals in Brazil USD Billion Number of deals * FDI Inflow FDI Outflow USD billion Source: Thomson Financial, Bloomberg, Brazilian Central Bank and UNCTAD (*) Brazilian Central Bank. Pending revision. 9

10 Increasing M&A Activity should continue its upward trend Structural factors will keep fostering M&A activity involving Brazilian players Domestic consolidation Internationalization 1 Still large number of highly fragmented industries 1 More competitive large-scale companies on a global basis 2 Increasing formalization of business practices 2 Structural comparative advantages in a variety of industries grant domestic players an edge on expanding internationally 3 Increased exposure to international competition 3 Strengthening of local currency makes cross-border acquisitions more affordable for Brazilian companies Funding coming from Private Equity Funds / Follow-on Proceeds FDI Debt/ Credit Markets 10

11 The Decoupling Debate IBOVESPA has held on despite the international turbulence in the last several months IBOVESPA v. Dow Jones v. FTSE 100 v. NIKKEI /27/2007 Subprime mortgage crisis begins /18/ FED cuts Federal Funds Rate by 0.5 % 03/15/2008 Bear Stearns receives emergency aid from Fed and JPMorgan makes a takeover bid jul-07 aug-07 sep-07 oct-07 nov-07 dec-07 jan-08 feb-08 mar-08 IBOVESPA Dow Jones FTSE 100 NIKKEI 225 Source: Bloomberg, data as of March, 18 th

12 The Decoupling Debate Will decoupling hold? 1 How long and how deep will the US recession be? 2 Will it reverse the upward trend in commodity prices? 3 Will domestic investment and consumption in Brazil be strong enough to offset the bad news coming from abroad? 12

13 The Decoupling Debate How long and how deep will the US recession be? Housing Figures Trade Balance (US$ billion) Jan Feb Mar Apr Mai Jun Jul Aug S&P/Case-Shiller Home Price Index Sep Out Nov Dez Jan '08 Pending Sales Index US Budget Surplus / Deficit (% GDP) Euro v. Dollar 2,4 1, ,2-1,5-1,9-2,6-3,5-3,6 Source: Standard&Poor s; National Association of Realtors, Federal Reserve Board, Bloomberg Jan 07 Feb 07 Mar 07 Apr 07 May 07 Jun Jul Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Jan 08 Feb 08 Mar 08 (1) Intended Federal Funds Rate 13

14 The Decoupling Debate Will it reverse the upward trend in commodity prices? Commodities Prices YTD /21/07 4/18/07 5/16/07 6/13/07 7/11/07 8/8/07 9/5/07 10/3/07 10/31/07 11/28/07 12/26/07 1/23/08 2/20/08 3/19/08 Metals (LMEX (1) Index) Oil (Brent) Soybeans (S&P GSCI Soybean Spot) Source: Bloomberg, data as of March, 27 th 2008 (1) London Metal Exchange 14

15 The Decoupling Debate Will it reverse the upward trend in commodities prices? IBOVESPA v. IBOVESPA (Excluding Petrobras and CVRD) v. Dow Jones v. S&P YTM /28/06 02/28/07 04/28/07 06/28/07 08/28/07 10/28/07 12/28/07 02/28/08 IBOVESPA IBOVESPA (excluding Petrobras and CVRD) Dow Jones S&P Source: Economática, data as of March, 27th

16 The Decoupling Debate Will domestic investment and consumption in Brazil offset the bad news coming from abroad? Data (Y-o-Y) Brazil United States Employment Level 3.2% 3.0% 2.9% 2.7% 3.1% 3.5% 3.0% 3.6% 1.2% 1.2% 0.7% 1.0% 0.4% 0.7% 0.2% 0.2% Jun Jul Aug Sep Oct Nov Dec Jan'08 Jun Jul Aug Sep Oct Nov Dec Jan'08 Industrial Production 6.6% 7.0% 6.6% 5.4% 10.5% 6.7% 6.3% 8.5% 1.5% 1.7% 2.2% 1.7% 2.3% 1.4% 1.8% 1.4% Jun Jul Aug Sep Oct Nov Dec Jan'08 Jun Jul Aug Sep Oct Nov Dec Jan'08 Retail Growth 11.4% 9.3% 10.3% 10.4% 9.5% 11.8% 9.7% 8.3% 6.0% 5.0% 5.0% 4.0% 3.0% 3.0% 3.0% 4.0% Jun Jul Aug Sep Oct Nov Dec Jan'08 Jun Jul Aug Sep Oct Nov Dec Jan'08 6.7% Average Real Wages 2.3% 1.9% 3.0% 1.3% 2.3% 1.5% 1.5% 1.4% 1.9% 1.2% -0.3% -0.8% -1.0% Jun Jul Aug Sep Oct Nov Dec Jun Jul Aug Sep Oct Nov Dec Source: IPEA, Brazilian Central Bank, US Department of Labor and Federal Reserve Board 16

17 Appendix - BBI Credentials

18 Banco Bradesco Overview Latin America s largest private-sector bank Founded in th largest bank in the Americas 40 th largest bank in the world Bradesco Highlights 1,2 Reais (billion) Dollars (billion) Market Value 2 Total Assets Lending portfolio Assets Under Management (Funds) Insurance and pensions 3 Shareholders (million) Conversion from Reais to Dollars: dated of 3/20/2008 (US$1 = R$1.73) 2 Data from 03/27/ Written premiums, pension plan income and capitalization revenue 18

19 Banco Bradesco BBI A full fledged investment bank founded on a client platform second to none in Brazil Investment Banking Retail Broker-Dealer Equities Corporate Over 1,300 economic groups with annual revenues in excess of R$ 350 mm each Fixed Income Private Equity / Bridge Fund Empresas Over 24,700 economic groups with annual revenues greater than R$ 50 mm each 19

20 Banco Bradesco BBI Track record Selected Deals Equity Joint Bookrunner & Global Coordinator Joint Bookrunner & Global Coordinator Joint Bookrunner & Global Coordinator Joint Bookrunner & Global Coordinator Joint Bookrunner & Global Coordinator Joint Bookrunner & Global Coordinator Joint Bookrunner Joint Bookrunner R$ 5,983.7 million R$ million R$ million R$ million Follow-on R$ million R$ 1,020.5 million Underway Underway R$ 6,625.5 million Nov/2007 Nov/2007 Oct/2007 Jul/2007 Jul/2007 Jun/2007 Oct/2007 Co-Lead Co-Lead Co-Lead Co-Lead Co-Lead Co-Lead Co-Lead Co-Lead Co-Lead Underway R$ million R$ million R$ million R$ million R$ million R$ 1,616.0 million R$ million R$ million Sep/2007 Jul/2007 Jun/2007 Jun/2007 Jun/2007 Mar/2007 Mar/2007 Jan/2007 Debt Foreign Market Tender Offering Acquisition Finance Joint Joint Senior Co-Manager Advisor Advisor Advisor Advisor for Advisor for Advisor and Structuring agent MTN Re-opening US$ 50.0 million Feb/2007 MTN US$ million Jan/2007 MTN US$3,750.0 million Nov/2006 Distribuidora de Produtos de Petróleo R$ million Oct/2007 Refinaria de Petróleo R$ million Oct/2007 Companhia Brasileira de Petróleo R$ million Nov/2007 Acquisition Finance Amount not disclosed Jun/2007 Acquisition finance/ Amount not disclosed Acquisition Finance R$1, million Mar/

21 Banco Bradesco BBI Track record Selected Deals Debt Local Market R$ million Underway Underway R$ million Mar/2008 Commercial Paper R$ 1,200.0 million Underway Mar/2008 R$ 5,000.0 million Jan/2008 R$ million Underway R$ million Dec/2007 R$ million Dec/2007 R$ million Sep/2007 Debt Local Market Project Finance Advisor and Lead Arranger Advisor and Arranger Advisor and Arranger Arranger Arranger R$ million Jul/2007 R$ million Jul/2007 R$ million Jul/2007 CCB s R$ million Jul/2007 HPP 885 MW R$ 1,633.2 million Oct/2007 Small Power Plant 28.0 MW R$ 88.5 million Dec/2007 Small Power Plant 27.4 MW R$ 98.8 million Dec/2007 Structured LC to BNDES R$ million Dec/2007 PET plant with capacity of 474,500 tpa R$ million Dec/2007 M&A Advisor to Advisor to Advisor to Advisor to Advisor to Advisor to Advisor to Advisor to for the acquisition of R$ million Underway for the acquisition of Grupo TF Modas owner of Mar/2008 for the acquisition of Underway for the acquisition of Grupo Victor Malzoni Dec/2007 for the disposal of shareholder interest R$ 2,242.5 million Jun/2007 for the acquisition of Amount not disclosed Mar/2007 for fairness opinion for merger with Mar/2007 for the acquisition of R$ million Jan/