BNDES: The Financial Support for IT and Innovation Projects December 2010
Demand Drivers for IT in Brazil Domestic demandis supporting growth: increasing employment rates and salaries; reducing social inequalities A resilient and lean corporate sector together with a strong andhealthy local financial industry Investments:Ongoing public policies to reduce the digital divide and foster broadbandpenetration are being designed or implemented: National Broadband Plan UCA(Brazil s One Laptop per Child) Connected Pc Program Diffusion of thebrazilian Digital TV System 10.2 2005 9.3 2006 2007 9.3 8.2 2009 2008 8.0 2010 7.2 Unemployment rate decreased from 10.2% in Jan 05 to 7.2% in Jan 10 Average Unemployment Rate (%) 10.9 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Microcomputer Sales (million units) Sources: IT Data and Abinee forecast 3.2 4.1 5.6 Source: IBGE 8.2 10.0 12.0 12.0 14.0 '03 '04 '05 '06 '07 '08 '09 '10 6.8 World Cup Olympic Games % of Households with Microcomputers 3 1 Source: IBGE 2 7 2 2 19 15 16 2 2003 2004 2005 2006 2007 2008
Software: Brazilian Market Brazilian Software Market (US$ Billion) Brazilian Market in 2009 US$ 15,36 billion 5,07 5,45 4,19 3,26 2,36 2,72 9,94 9,91 3,62 4,69 5,83 6,93 2004 2005 2006 2007 2008 2009 Source: ABES Services Product/Software
Support to Priority Sectors (IT) PROSOFT Expanding Industry Borders: Software Product and Services 1) Promote the growth of IT companies through easy access to capital (special credit rules) 2) Encourage the improvement of management, quality, marketing and certification of products and processes related to software (support for the business plan as a whole) Increase participation of Brazilian IT companies in the domestic and international markets 3) Attract software and service multinationals to enrich Brazil s exports (new products, captive centers, off-shoring, BPO, etc.) 4
Combining Tools: Financing + Equity Equity Angel Investors Seed Capital Equity, Funds and Capitalization Venture Capital Funds Start-Ups Private Equity Funds Early Stage Emerging Companies IPO Mature Companies Capital Market Stocks and Debentures + Lines, Products and Programs Financing Business Enterprise Projects Innovation Industrial Projects Exports Machinery and equipments Intangible Assets Micro, Small and Medium Enterprises Commercialization
Credit
PROSOFT Sub-programs PROSOFT-Company Support for investments and business plans of software companies and suppliers of IT services. PROSOFT-Commercialization Financing for the acquisition, in the internal market, of software and related services developed in Brazil, exclusively through Accredited Financial Institutions. PROSOFT-Export Financing for software or IT services export (pre-shipment or post-shipment)
PROSOFT Cumulative Value (R$ Mil) 1.400.000 1.200.000 1.000.000 800.000 600.000 400.000 200.000 0 PROSOFT Contracts Company Export Commercialization 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
BNDES: Support to Software BNDES Operations with Software Sector June 2010 PROSOFT-Company Approved + Contracted Pledges in different stages in BNDES PROSOFT-Commercialization (contracted) PROSOFT-Export (contracted) Total PROSOFT Portfolio BNDES Credit Card TOTAL Operations 293 8.752 9.045 R$ thous. 2.087.492 1.613.420 474.072 73.449 426.218 2.587.492 165.447 2.752.606
PROSOFT Company PROSOFT Company Portfolio 50% Small Number of Operations 40% 30% 20% 10% Micro Medium Big 0% Company Size
PROSOFT Company Growth Rate (comparing revenues in PROSOFT year and last balance sheet available 120% 100% 80% Growth Rate (%) 60% 40% 20% 0% -20% -40% Software and IT Services Companies
Direct and Indirect Equity Participation
Direct Equity: SMBs in Innovation Sectors Strong record for investing in SMBs in innovation sectors since 1989; Most SMBsremain non-listed Currently Invested Companies Sectorial Distribution Number of Companies Invested Capital (in US$ million) IT 7 251.1 Biotech /Pharmaceutical 6 81.0 Electric /Electronic 9 54.0 Telecom 3 17.2 Others 2 123.6 Total 27 527.0
Several companies have BNDES as shareholder through BNDESPAR Source: BNDES, Companies web-sites
Totvs Track Record Gross Revenue (R$ million) and EBITDA Margin (%) Midbyte and BCS Aquisitions Aquisition 760 1.1 Bn 25.2% 98 106 LOGOCENTER Aquisition 247 126 173 110 392 IPO 18.4% 13.9% 490 21.9% 20.6% 8.4% 6.5% 10.6% 12.4% 12.4% CMMI3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Mar-10 Sep-09 Dec-09 Totvs Stock Performance Market Capitalization: US$ 2.1 Billions; Outperformed BOVESPA Index by 124% in the period. 450 400 350 300 250 200 150 100 50 - Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 TOTVS IBOVESPA
Indirect Operations Invest in PE/VC Funds Multiply possibilities for private companies in the capitalization process Same objectives as its direct stakes (corporate governance; support to strategic sectors; foster Brazilian capital markets) Promote private equity and venture capital activity in Brazil Share risk with other institutional investors 17
Thank you! Brazilian Development Bank - BNDES Industrial Area Information Technology Department kauss@bndes.gov.br