Private Equity Investment Funds FIP

Transcription

1 Variable Income Private Equity Investment Funds FIP

2 Private Equity Investment Funds The product The Private Equity Investment Fund (FIP) represents a pool of resources for investment in private and publicly held companies, or limited societies, in development stage. The fund manager has the responsibility of constituting the fund and conducting the fundraising process with investors through the sales of shares. The FIP is a variable income investment structured as a closed-end fund, in which the shares can only be redeemed at the end of the duration of the fund or when the general shareholders meeting deliberates on the liquidation. The fund must participate in the decision making process of the investee company, with strong influence on the determination of the strategic policy and management, especially through the recommendation for nomination of board members. The fund s participation in the decision making process of the investee company may happen: through the holding of stocks of the controlling block; through a shareholders agreement; through the adoption of procedures that ensure the fund s influence to define its strategic policy and management. The FIP seeks to create value for the company through the development of its business and through the implementation of corporate governance practices. The FIPs are separated into the following categories, accordingly to its investment portfolio: FIP Seed Capital: invests in the acquisition of participations in companies or limited partnerships of annual gross revenues limited to the maximum amount of R$ 16 million, achieved on the fiscal year before the fund s investment, without having obtained superior gross revenue in the three past fiscal years FIP Emerging Companies: invests in the acquisition of participations in companies or limited partnerships of annual gross revenues limited to the maximum amount of R$ 300 million, achieved on the preceding fiscal year of the fund s investment, without presenting superior gross revenue in the three past fiscal years FIP Infrastructure (FIP-IE) and FIP Intensive Economic Production in Research, Development and Innovation (FIP-PD&I): These categories of FIP keeps their patrimonies invested in bonds of, private or public held, business corporations which develop, respectively, projects of infrastructure or intensive economic production in research, development, and innovation. On the energy, transportation, water and basic sanitation, irrigation, or other sectors important to the Federal Executive Power. Each of these FIP, must have at least 5 shareholders, and neither of them can own more than 40% of the total FIP s shares, or earn more than 40% of the fund s earnings.

3 FIP Multistrategy: These funds do not fit in any of the above categories; they admit investment in companies of any types and sizes. They are also able to invest 100% of its subscribed capital in foreign assets, but in this case, they are available exclusively for professional investors. The fund must invest at least 90% of its equity in stocks, simple debentures, subscription warrants or other securities convertible into or exchangeable for shares of private or public companies, or business corporations which the fund aims to influence as to the decision making process. With an exception to debentures, which are limited to a maximum of 33% of the total fund s subscribed capital. Every FIP can invest up to 20% of its subscribed capital in foreign assets, since these assets has the same economic nature of the FIP s category. In addition, they can also invest in other FIP s shares or stock fund s shares so they can achieve the 90% minimum requisite. The funds, who obtains direct financial support from promotion corporations, are authorized to acquire loans directly from these promotion corporations limited to an amount of 30% of the fund s assets. The Private Equity Investment Funds are regulated by CVM Instruction No 391 of Product Benefits the fund is managed by a professional manager with the expertise and technical conditions that enable him to analyze the investments with the best overperformance; investors participate in the business growth of private and public companies that underlie the fund's portfolio; FIPs seek investments with high potential of return, resulting in significant earnings opportunities; FIPs allow investment diversification, mitigating the risk of the fund s portfolio. Be aware! When investing in Private Equity Investment Funds, investors should note that: FIP is a variable income product, therefore the fund may not achieve the expected returns in case of a drop in stock prices; and there may be no buy offers when a FIP shareholder needs to end the investment prior to maturity

4 Technical Specifications Capital Calls Investments can be made by means of a commitment, whereby the investor is due to deliver the amount of capital committed as the fund manager calls for capital in accordance with deadlines, decisionmaking processes and other due diligences established beforehand. Classes of shares FIP investments Market Public Offerings Allowed Investors Fund Registration The FIP regulation may admit the existence of one or more classes of shares, granting them special voting rights for some specified matters. Similarly, the regulation may assign different economic and financial rights according to the setting of management and performance fees and their calculation bases for one or more classes of shares. FIP destined exclusively to professional investors or the ones who obtain direct financial support from promoting companies may attribute to one or more shares, distinct economic and financial rights besides the ones above The period of investment in FIP will be determined by the fund regulation and may be reduced or extended by the fund's shareholders at a shareholders meeting. The FIP investments shall be conducted in accordance with the investment policy stated beforehand. Otherwise, the administrator or the manager of the fund may be liable for losses that the fund might undergo. After the maturity period, the fund may, partially or completely, divest some companies and may, among other possibilities, do so through an IPO. The FIP Administrator may use the resources from disposals to reinvest in other companies. Cash Permitted, pursuant to CVM Instruction No 400 of , or with restricted placement efforts, pursuant to CVM Instruction No 476 of Only qualified investors may invest. Some of the FIP Multistrategy may determine if stated beforehand, that shares are only destined for professional investors. The fund is subject to registration with CVM, pursuant to Instruction No 391 of

5 Applicability An administrator constitutes a FIP with the purpose of acquiring shareholding interest in development stage companies with strong growth potential. Shares of FIP are sold to investors; with the funds raised, the fund buys stocks of selected companies. Considering that the FIP participates in the decision making process of companies, the fund seeks to make the management of these companies more professional and efficient, maximize their results and increase their corporate governance requirements, and, over the years, further accelerate the companies growth. With the growth of these companies and by increasing their market values, the FIP can divest through the sale of their equity stake. The sale of shareholding interest may occur in several ways. One is the IPO of investee companies and the sale of their stocks. After the sale of stocks, the FIP may distribute resources to its shareholders, in the form of income, or reinvest in new companies, restarting the cycle. Legal Disclaimer This document is intended solely for informational, explanatory and advertising purposes and does not represent in any way an investment recommendation. The examples herein are mere illustrations and simulations of hypothetical situations. The regulations and procedures referred to in this document are subject to change, therefore direct consultation of their updated versions is recommended. Use of this document for commercial purposes is prohibited except upon prior written consent from BM&FBOVESPA. Any losses resulting from intermediation of organized over-the-counter market trades and custody services and from services regarding the registration environment operated by BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros, are not protected by the Mecanismo de Ressarcimentos de Prejuízos operated by BM&FBOVESPA Market Supervision (BSM) pursuant to the provisions of article 41 of the BSM Bylaws and of article 77 of CVM Instruction No 461/2007.