"Brazil Erodes Last BRIC Refuge for Investment Banks."
Brazil: Guarantees By Brazilian Equity Investment Funds (FIPS)
Foreign investment in Brazil update: 2013 Annual Census of Foreign Capitals
Brazil grinds out a result
Investment chief: Brazil is making the right reforms to attract European business
New SMS Service
Welcome to the August edition of the Greenwood Management monthly newsletter.
Our aim is to send out a newsletter on a monthly basis to advise you of future events and report on previous industry related themes and news articles.
Currently taking place on our plantations in Brazil is the seasonal pruning of the Acacia trees. This is a necessary process to combat fungal infections and to allow the trees to continue growing in the best and strongest shape. Quite often, you find with the Acacia trees, that the branches separate so the pruning in this instance is to prevent this bifurcation*.Definition of Bifurcation - the splitting of a main body into two parts, Wikipedia
We are also currently testing a new organic fertilizer, which if proven as successful will become a permanent tool to enhance the growth of our trees. This is one of many improvements made to help reach our ‘green goals’ as a company and be as earth friendly as possible whilst also providing the best possible results for your investments.
We have included below some investment articles that may be of interest. Enjoy reading and look out for announcements on our new project.
If you have any suggestions for future newsletters please click here to provide your suggestions and we will do our best to meet your requests.
"Brazil Erodes Last BRIC Refuge for Investment Banks.
Brazil is the only so-called BRIC emerging economy where companies not owned by the government, such as Credit Suisse Group AG (CSGN) and Grupo BTG Pactual, still earn the most investment-banking fees. That may soon end.
Banco do Brasil SA and CaixaEconomica Federal, both government-controlled, are using their dominance of the nation’s loan markets and special relationship with President DilmaRousseff’s administration as a wedge to unseat non-state firms in the race for investment-banking fees.
Banco do Brasil, already the country’s biggest lender by assets, wants to be the No. 1 investment bank as well, said Paulo RogerioCaffarelli, vice president for wholesale banking. Caixa asked regulators in October for a license to create a 300-person unit. They would compete with BancoItau BBA SA, BTG and Credit Suisse, the top three companies by investment-banking fees this year, according to research firm Dealogic.
To read the full story click here.
The Brazilian Equity Investment Fund (Fundo de InvestimentoemParticipações - FIP) is legally characterized as a co-ownership of proceeds from several investors with the purpose of investing in financial assets. The FIP has no legal personality and must be registered with the Brazilian Securities and Exchange Commission (Comissão de ValoresMobiliários - CVM). Designed specifically for the private equity sector, the FIP is required to participate in the decision process of portfolio companies. Its main attraction is the fact that any income or capital gains earned by a foreign investor in a FIP is not subject to any Brazilian withholding income tax, provided that certain requirements are met. The FIP also enjoys several other tax benefits.
These requirements are the following: (i) the investment must be made in accordance with the provisions of Resolution No. 2689 of January 26, 2000 (Res. 2689/2000), issued by the Brazilian Monetary Council (ConselhoMonetárioNacional - CMN)2; (ii) the foreign investor cannot hold, individually or jointly with related persons, shares representing (a) 40% or more of all the FIP' units or (b) 40% or more of the total income of the FIP; (iii) the FIP cannot hold in its portfolio, at any time, debt securities exceeding 5% of the FIP's net equity; and (iv) foreign investors cannot be residents in a favored taxation country or dependency.
The provisions of CVM Instruction No. 391 of July 16, 2003 (CVM Instr. 391/2003), which regulates the incorporation, management and operation of the FIPs, have been amended by CVM Instruction No. 535, of June 28, 2013 (CVM Instr. 535/2013).
Foreign investment in Brazil update: 2013 Annual Census of Foreign Capitals
Brazil is one of the countries that most attracts foreign investment. However, it has historically imposed controls over cross-border currency transactions. In addition to requiring foreign investors to process their capital through financial institutions authorized to operate in foreign exchange and to register their direct investments with the Brazilian Central Bank’s (“Bacen”) electronic system, Brazil also requires Brazilian companies to declare to the Bacen the amount of equity owned by foreign investors. This declaration is called “Census of Foreign Capitals in Brazil”.
What is the Purpose of this Census?
The Census of Foreign Capitals in Brazil has been carried out since 1996 by the Bacen in order to collect statistical information and confirm Brazil’s International Investment Position (IIP), as required by the International Monetary Fund (IMF). The information collected is kept confidential and published as consolidated data, without identifying individual situations.
Who Must File the Report?
For the 2013 Annual Census of Foreign Capitals in Brazil, all legal entities registered in Brazil (investment funds, corporations and partnerships incorporated under Brazilian law) and owned by foreigners who had more than US$100 million in net assets on December 31, 2012 are required to report the amount equivalent in shares or quotas held by foreign investors, regardless of the amount or percentage owned.
Brazilian legal entities with outstanding short-term (up to 360 days) foreign accounts receivable equal or superior to US$10 million on December 31, 2012, regardless of foreign capital participation, are also required to present this report.
Individuals, administrative bodies of the federal, state, federal district or municipal governments, legal entities having outstanding external debt arising out of lending transactions carried out by Brazilian financial institutions, and not-for-profit entities funded by foreigners are not required to file this report
The South Americans are dominating possession. And it’s not only on the football pitch.
Net flows at Brazilian equity mutual funds have been positive for 11 out of the 12 months to end-May, according to estimates from Lipper, leading to total net inflows over the period of about $13 billion. That stands in stark contrast to the other three BRIC emerging market powerhouses.
China equity funds have waved goodbye to almost £3 billion in that time, Russia a similar amount and India $4 billion. India equity funds have seen 12 straight months of net outflows, Russia 10 out of 12 and China nine out of 12. The graphic below makes the trend clear, with Brazil the only BRIC to show net inflows to equity funds in eight of the 12 months examined. (A brief note on India: the reporting timetable of locally-domiciled funds means that these numbers are largely from funds based outside the country, which account for about half of assets)
Investment chief: Brazil is making the right reforms to attract European business.
Opening up public procurement, a new concessions programme and reducing energy prices are all reforms implemented by Brasilia to attract EU and US companies. The new measures are likely to strengthen the EU-Brazil investment relationship, paving the way for stronger ties between the two trading partners, says AlexandrePetry, director at the Brazilian trade and investment promotion agency.
AlexandrePetry is the head of the Investment unit at Apex-Brazil, the Brazilian Trade and Investment promotion agency helping both Brazilian and foreign companies to invest in the Latin-American country. He spoke to EurActiv's Daniela Vincenti.
How would you describe current EU-Brazil economic and investment relations?
The European Union and European countries have been frequent investors in Brazil for the past 10-20-30 years. The EU is the third biggest investor to Brazil and I believe this will continue in the upcoming years. There is a tradition of EU companies to invest in Brazil.
There are some companies in sectors like the oil and gas industry, renewable energy, telecommunications, banking services and automotive industry that will continue investing there in the future.
And this despite the fact that Brazil is not growing at the moment and is facing a sluggish economy?
Even though our economy is not growing, true, there are some niches and some sectors are growing at a faster pace than the whole economy. I believe that there are some specific segments that companies can benefit from.
In the infrastructure and logistics sector, the government has finally launched a concessions programme, including airport, ports, railway, roads. This will require a lot of investment. Brazil has created an institution called Brazilian Logistic Planning, whereby they expect the next five years they would $235 billion in investment to run all those concession programmes. There are new opportunities opening up in Brazil.
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