TMF-市場(chǎng)洞察報(bào)告：在私募股權(quán)市場(chǎng)尋找價(jià)值（英文）-2021.03正式版WN4

FindingvalueinPEmarkets

Marketinsightreport

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TMFMARKETINSIGHT

Contents

03 ESGreporting

WhenitcomestoESGreporting,weshouldn’tletprettygoodbetheenemyofperfect

06 Theroleoftechnology

Hastechnologyhelpedmanagerstoremainoperationallyrobust?

09 FindingvalueinLatinAmerica

BrazilprovidesPEinvestorswitharealroutetoLatAmopportunities

12 FindingvalueinAsiaPacific

Analysingwhereinvestorslookforopportunitiesinthewakeofthepandemic

15 Findingvaluethroughinnovation

DynamicreportinganddatavisualisationtoolsaresettoimproveGP/LPrelationships

18 FindingvalueinESG

AnAPACperspective

21 FindingvalueinEMEA

CantheEuropeanGreenDealunlockopportunitiesforprivateequityinvestors?

23 FindingvalueintheGP/LPrelationship

Maintainingstrongtieshasbecomemoreimportantthaneverwiththecurrentmovetowardsremoteworking

WEMAKEACOMPLEXWORLDSIMPLE

TMFGroupistheleadingproviderofadministrativesupportservices,helpingclientsaccesssome

oftheworld’smostattractivemarkets–nomatterhowcomplex–swiftly,safelyandefficiently.

Withsome7,800experts–in-house,onthegroundinover80locations–wearetheonlycompany

worldwidetoprovidethecombinationoffiduciary,companysecretarial,accountingandtax

andHRandpayrollservicesessentialtothesuccessofbusinessesinvesting,operatingand

expandingacrossmultiplejurisdictions.

That’swhyover60%oftheFortuneGlobal500andFTSE100,andalmosthalfofthetop300

privateequityfirms,useus.

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ESGreporting

WhenitcomestoESGreporting,weshouldn’tletprettygoodbetheenemyofperfect

Inhis

2020lettertoCEOs

,BlackRockCEOLarryFinkwrotethattheinvestmentriskspresentedbyclimatechange“aresettoaccelerateasignificantreallocationofcapital,whichwillinturnhaveaprofoundimpactonthepricingofriskandassets

aroundtheworld”.

ESGrisksarenowbecomingasimportanttothewaymanagersthinkabouttheirportfoliosastraditionalmarket-relatedinvestmentrisks,promptingmanyPEfirmstoconsiderwhatismostimportanttothem,fromanESGperspective,andhowbesttocodifyitwithintheirESGpolicy.

Inhisletter,Finkgoesontosaythatresilientandwell-constructedportfoliosareessentialtoachievinglong-terminvestmentgoals:“Ourinvestmentconvictionisthatsus-tainability-integratedportfolioscanprovidebetterrisk-adjustedreturnstoinvestors.Andwiththeimpactofsustainabilityoninvestmentreturnsincreasing,webelievethatsustain-ableinvestmentwillbeacriticalfoundationforclientportfoliosgoingforward,”hewrote.

Itishardtodisagreewiththefactthattoday,ESGfactorsrepresentaseculartrendthatisonlygoingtocontinuetoevolveoverthenextdecade.Intimespast,therehavebeenvariousmomentsofinterest,inaninvestingcontext,suchasportablealphaand130/30strategies,whichbecamealltherageamonginvestors,onlytothenfizzleout.

ButESGinvesting,andthemyriadimplicationsassociatedwithit,isnofad.Thisisnowabonafidecoreelementofhowinstitutionalallocatorsassessprivatemarketmanagers.

“ESGreallyisthequestionofthehour,”saysHowardEisen,HeadofFundServicesSalesforNorthAmerica,TMFGroup.“Iwouldsaythisfeelsmoredurableandmorestructuralandthatitisnotsimplyafad.Rather,itisanethicalandexistentialissueforagrowingnumberofpeople.”

MajorfinancialinstitutionslikeBlackRockaretakingaleadonESG,payingcarefulatten-tiontohowtheyintegrateESGfactorsintotheirfundportfoliosandfocusingintentlyonESG.Theyhaveto,giventhattheyexpectcompaniestheyinvestwithtodotheverysamething.

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ESGreallyisthequestionofthehour.Iwouldsaythisfeelsmoredurableandmorestructuralandthatitisnotsimplyafad.Rather,itisanethicalandexistentialissueforagrowingnumberofpeople.

HowardEisen

AndwhereasintheearlydaysofESGinvesting,say15yearsago,therewasafairdegreeofscepticismoverwhyfundmanagerswouldseektoprioritisesustainability,potentiallydilutingthefinancialreturnsonoffer,thismind-sethasincreasinglyfadedintothebackground.

“WhenESGfirstcametotheforefront,thebiggestargumentagainstitwaswhetherthecomponentsofESGwerecompatiblewithreturnexpectationssoughtoutbyinvestors.ThereweremanypeoplewhodidnotseetheconsistencyandthatifyouputESGfactorsaheadoffundamentalfactorswheninvesting,youwouldreducereturns.Howcouldyouelevatevirtueoverprofitandhavethatbecommerciallyviable?

“TheworldisnowbroadanddiverseenoughsuchthatthereareopportunitiestomakemoneyifyoukeepESGfactorshigh,ifnotatthetop,ofone’slistofpriorities,”saysEisen.

Oneoftheuniquechallenges,however,isthatwhilethereisasurfeitofinformationinthepublicmarkets,withtechnologyprovidersabletocreateaconsistentframe-worktorankESGfactors,thereisnouniformwayofgatheringandreportingESGdatawithinprivatemarkets.

NobodyyetagreesonwhatistherightsetofESGfac-torsandeveniftheydid,thereisstillnoconsistentwaytoefficientlygather,rateandrankESGinformation.

“BothontheGPsideandtheallocatorsidethereisacontinuingandsteepeningslopeofattentionandresourcesbeingappliedtoESG.PeopleareattemptingtoengineersolutionssothataPEorVCmanagermightbeabletogatherandapplyESGdatainaconsistentmanneracrosstheirportfolio.Thebestapproachistohaveanindependentbody–similartosayILPA–ratherthanacommerciallydrivenorganisation,todevelopanESGreportingstandard,withinputfromindustrypartici-pants,”arguesEisen.

Ofcourse,therearewaysforGPstodemonstratetoinvestorsthattheyaretakingESGrisksseriouslyintheir

portfolios,suchasbyaskingcompaniestoadheretoSASBreporting,orbydemonstratingtoinvestorswhichUNSustainableDevelopmentGoalstheirstrategiesarealignedwith.Indeed,theTaskForceonClimate-relatedFinancialDisclosures(TCFD)ishelpingtodriveadoptionofESGreportingamongcorporates,bothinpublicandprivatemarkets.

ThisiscertainlyhelpingtobringESGtransparencytoahigherplane,butprivatemarketsremainatsomedistancefromarrivingatauniformlyagreed-uponESGreportingstandard.

AsEisenisquicktopointout,thisisafast-evolvingconceptandthegoalpostswillinevitablymove.

“Likesomanyotherthings,thebestwaytotellhowthisisgoingtoplayoutistofollowthemoney.Theman-agersarefocusedonexpandingtheirclientbase.Andifagrowingamountofmoney,andagrowingnumberofallocators,areelevatingESGconsiderationswithintheirinvestmentprogrammes,thereisnoquestionthattheeconomicincentivestomanagersmeanthattheyhavetocommitresourcestothis.

“IfyougotothewebsitesoflargeallocatorswhoreallyembraceESG,suchassomeofthelargeuniversityendow-mentsandpublicpensionplans,theythemselvesarefairlyvaguewithrespecttothisissueofanESGstandard.

“Itstartsatthetopofthefoodchainwithnationalgov-ernments.TheParisClimateAccordistheclosestwe’vecome.YouhavedifferentregulatoryregimesintheEU,theUS,LatinAmerica,Asiaandifwecan’tagreeonregula-toryissues,whichtendtobefairlyblackandwhite,howarewegoingtoarriveatauniformlyacceptedstandardonESGissues,whicharenotblackandwhite?

“WewillmakeprogressbutIdoubtthatwewilleverachieveglobalharmonyonESGthateverycountry,andeveryinvestmentfirm,accepts.We’regoingtohavetoacceptthefactthatweshouldn’tletprettygoodbetheenemyofperfect,”explainsEisen.

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TMFGroup’sglobalclientshavestartedtakingESGissuesmoreseriously,acrossallshapesandsizesofmanager,accordingtoEisen.IfinvestorswantmoreESGtranspar-ency,managershavetorespondinkind.

“Investorswanttoseetheseissuesadvanceandifyou’reanemergingmanageringrowthmode,oramid-sizedmanageraspiringtothenextlevel,you’regoingtowanttomakesureyoucanrespondtoinvestors’needs,”hesays.

AndeventhoughprivatemarketmanagershavetoworkhardtoovercometheissuesofhowbesttogatherandrankESGdatainaconsistentmanner,itisnotasifthereisalackofdata.Indeed,ESGdataprovidedbybothpublicandprivatecompaniescontinuestoimprove.

OneofthequestionsmanagersneedtoaskthemselvesishowbesttoapplyESGdataacrosstheirfundportfolios,whichmightholdadiversenumberofassetsspanningindustrial,software,healthcaresectorsandsoon.

“Thedataisavailablebutitwilldependonthefollowing:a)howefficientlyitcanbeextracted;b)whatarethestandardsthatyoudeterminetobethemostimportant?and

howisthedataappliedconsistentlytogetanESGrankingthatmakessenseacrosstheentireportfolio,fromFundIthroughtoFundXX?

FormanagersandallocatorsaliketomakesenseofESGreporting,andtomeaning-fullyapplybenchmarking,itwillbenecessarytorankdifferentpartsoftheportfolio,attheindividualsectorlevel,usinganESGtaxonomy;especiallyforgeneralistPEfunds.Foraspecialisthealthcare-focusedfund,forexample,thesameESGrankingcouldapplyatthewiderportfoliolevel.

“Forme,itreallycomesdowntoaddressingthedisparateopinionsofwhatisimpor-tantundertheESGumbrella,andhowtoapplyESGrankingstodifferentcompaniesoperatingacrossindustrysectors,”statesEisen.

Headds:“YoucouldmakeaboldstatementinyourESGpolicythatyouonlyinvestincompaniesusingsupplychainsthathavenoassociationwithhumanrightsabuses.Buthowdoesthatapplytoanadvertisingagency,forexample,wherethereisnosupplychain?

“Therecan’tbeaone-size-fits-allapproach.IthinktherewillneedtobeataxonomythatcanbeappliedbyGPsindifferentwaystodifferentcompanies,baseduponsector,product…thingslikethat.Butthequestionwillalwaysremain:‘Whatisimportanttoyou?’Isitmoreimportanttohavegenderdiversityinseniorpositions?Isitmoreimportanttoloweryourcarbonfootprint,ortoensuretherearenohumanrightsissuesrelatedtocorporatesupplychains?”

TherearesomanyfacetstohowmanagersneedtothinkaboutESGfactors.Butonethingisforsure:thisisatrendthatshowsnosignofstopping.Withclimaterisk,diversityandinclusion,andcloserscrutinyonsupplychains,allcomingtotheforeinrecenttimes,managerscannotaffordtotaketheireyeoffthisincreasinglyrelevant,seculartheme.n

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Theroleoftechnology

Hastechnologyhelpedmanagerstoremainoperationallyrobust?

2020wasarguablyadefiningmomentforthepri-vatefundsmarketplace,astechnology–ormorebroadly,digitalisation–helpedfundmanagementgroupsmaintainbusinessasusualinthefaceofextraor-

dinarycircumstances.

Inthemain,firmshadalreadybeenonthepathtowardsdigitalisationtovaryingdegrees,andhadthetechnologyinplace,priortoCovid-19;butwhatthepan-demicdiddowastoacceleratethepaceofadoptiontosupportoperationalactivities.

“It’sreallybeenacaseofmakingsuretheinfrastructurewastheretoenableabroaderbusinessuseoftechnol-ogytoolssuchasMSTeams,Slack,etc.Dotheyhavethebandwidthintheirinfrastructure?Thisissomethingglobalfirmshavehadtolookatoverthepast12months,”com-mentsOliverSinclair,FundsServices&CapitalMarketsApplicationPortfolioLeadatTMFGroup.

Technologyisbecominganadjunct,anenablertosupportGPs,astheysteadilymodernisetheiroperatingmodel.Andwhileitisdifficulttoofferbroadgeneralitiesonthepaceoftechnologyadoption,thereareafewkeyareaswheretechnologyhasmadeitsmarkoverthelast12months:1)Virtualfundraising;2)VirtualODD;and3)

globaltravel,ithasbeenagamechanger.Forexample,UK-basedTenzingPrivateEquity,atech-focusedinvestor,wasabletoraiseGBP400millioninjustnineweeks,with-outconductinganyface-to-facemeetings,asreportedbyPrivateEquityInternationalon7September2020.

AnotherexampleisWaterlandPrivateEquityInvestments,whoclosedWaterlandPrivateEquityFundVIIIwithahardcapofEUR2.5billioninthreemonthsinafullyvirtualcapacity.

Thisisevidenceofvideoconferencingtechnologyimprovingproductivitylevels.

“Iwouldsayafundmarketerisgoingtohaveamuchhighersuccessratewithexistinginvestors,”saysHowardEisen,HeadofFundServicesSalesforNorthAmerica,TMFGroup.“Fornewinvestors,itishardtoestablishanythingmorethanintroductoryrelationships,inthevir-tualrealm.There’sanoldsayingthatpeopledobusinesswithpeopletheywanttodobusinesswith.Idon’tthinkthevirtualenvironmentistherightformattoreallygettoknowanewmanager.”

Hegoesontosuggestthatafirstderivativeimpactoftechnologyonthecurrentenvironmentishowtechnology

hasenabledtheflowofdocuments–i.e.thesubscrip-tionprocess,thecapitalcallprocess–andreducedtheamountoffriction,“toallowmanagerstocontinuetooperateandraisecapitalinthisenvironment”.

AnjaGrennerisHeadofFundServicesSalesforLuxembourg,TMFGroup.TheGrandDuchyisapopularfundjurisdictionformanyoftheworld’sleadingprivateequityandrealestategroups,aswellasanincreasingnumberofnewmanagers.GrennerobservesthatlastyearmanyofthenewmanagersextendedtheirfundlaunchdatesandfundraisingactivitiesintoQ1andQ22021.

“Theyknewthatwithoutmakingtheacquaintanceofinvestorsitjustwouldn’twork,”saysGrenner.“For

VirtualAGMs.Thequestionis,towhatextentwilltheseactivitiesremaininthevirtualrealm.Willtheyrepresentlong-termchange,oratemporarysolution?

Virtualfundraising

Ontheissueofvirtualfundraising,whichhasenabledGPstobetterconnectwiththeirLPswithouttheinefficiencyof

TheamountofsecurityandAI-drivenantivirustoolswehavetothinkaboutisbecominganincreasingchunkofourinfrastructurespendaswelooktoprotect

ourclients’datafromexternalthreats.

OliverSinclair

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Forestablishedfundmanagers,we’venoticedthatinvestorshavetendedtostickwiththemasthey’vesoughttoconcentratetheirPEportfolios.Whatthisultimatelymeansisthatthebigmanagerskeepongettingbiggerandvice?versa.

AnjaGrenner

establishedfundmanagers,we’venoticedthatinvestorshavetendedtostickwiththemasthey’vesoughttocon-centratetheirPEportfolios.Whatthisultimatelymeansisthatthebigmanagerskeepongettingbiggerandvice-versa.Fundraisingassuchseemedtobeprettygoodlastyear,withmanagersabletoraisehigheramountsfortheirlatestfundscomparedtopreviousvintages.Onecandomanymorevirtualmeetingsinadaycomparedtotravellingfromcitytocity,sointhatrespect,technologyhascertainlymadefundraisingmoreefficient.That’sgoodfortheindus-try,asprivateequitycontinuestomatureandindustrialise.”

Aswellasimprovingfundraisingspeed,establishedmanagershavealsosoughttoleveragevideotechnol-ogytogetclosertotheirportfoliocompanies,hostingmorefrequentonlinemeetingswithmanagementteamstokeepontopofoperationalissues.AccordingtoAnibalWadih,FounderandManagingPartnerofBrazil-basedGEFCapitalPartners,thishasfosteredagreaterfeelingofsharedresponsibility.

“Itwasacaseofsaying:‘Let’sfocusontheimmedi-ateoperationalissues,andfixthem’.WeorganisedcallsamongalloftheCFOsofourportfoliocompaniesduringtheearlyperiodofthelockdowntotalkandexchangeideas.ThenwedidthesamewiththeCEOs.”HesaysthatGEFCapitalplanstointroducethiscollectiveidea-sharingapproachonapermanentbasisgoingforward.

VirtualODD

Muchlikethefundraisingprocess,onemightexpectvir-tualODDtohavelong-termbenefitsonlyforthosewithanestablishedreputationandtrackrecordintheindus-try.Firsttimefundmanagerscan’texpectprospectiveinvestorstogetcomfortablewiththeiroperational–andinvestment–processeswithoutmeetinginperson.Therewillbelimitationstohowinvestorsareabletogetunderthehoodofsuchmanagers:investmentcommitteeshaveafiduciaryresponsibilityafterall.

Aninvestorneedstoknowwhatmakespeopletick,whattheirpersonalitiesare.Theycan’tachievethatbylookingatsomeoneonacomputerscreen.

“WithregardstovirtualODD,thereisadegreeofcon-sensusthatthisisacceptableformanagerswithwhominvestorsalreadyhavelongstandingexistingrelation-ships,”statesEisen.“Itonlyrequiresdoingduediligenceonthemanager’slatestfundvehicle,whichisfareasiertodoifthey’vealreadyinvestedinFundsIandII,forexample.However,itdoesnotprovetobeasservice-ablefornewmanagers,towhominvestorshaveneverallocatedcapitalbefore,anddonothavearapportwith.”

GCMGrosvenor

,theChicago-basedglobalinvestmentandadvisoryfirm,pointsoutthat“manyinvestorsfearthatwithouttheopportunitytomeetamanagerface-to-face,watchtheirbodylanguage,assesstheircultureandtourtheiroffices,theevaluationofthatmanagermaybeincomplete,andthuspresentsrisks”.

Fromanefficiencyperspective,virtualODDallowsinvestorstoschedulemorefrequent,focusedmeetings,notjustwithaGP’soperationsteam,butwithexecutivesacrosstheorganisation.Ifthisisanewmanager,initialgroundworkcanbedonevirtually,andgiveinvestorsmoretimetoassessoperationalprocessesandcontrols.ThesameisalsotrueforPEfirmsatthepre-investmentstage,whenanalysingthemeritsofapotentialdeal.

Videocallscanhelptoremovesomeoftheusualvagariesofin-personmeetingsandprioritisekeyitemsorrisks.Then,iftheinvestorneedstocompletethenego-tiationsin-person,thatfinalstageoftheODDprocessshouldbesmoother.But,forallocationstomanagerswithwhomtheyhavenotpreviouslyinvested,itwillberareforinvestorstobecomecomfortablewitheithertheinvestmentprocessoroperationswithoutsomein-person,on-siteinteractions.Ultimately,anyremoteduediligenceprocesswillneedtobecomprehensiveandprovideinves-torswithasmuchconfidenceaspossibleinhowthe

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managernegotiates,sourcesdeals,reportsandmaintainsgovernancecontrols.

VirtualAGMs

AccordingtoaRedePartnersCovid-19PulseReportinSeptember2020,92%ofLPsbelieveremoteworkingwillbemorereadilyacceptedintheirorganisationsoverthelongterm.TheimplicationofthisisthatvirtualAGMswilllikelybecomeamorepermanentchangetothewayLPsinteractwithGPsintheirportfolios.Thiswillalsoextendtoduediligenceastheyre-upwithGPs.

“WithvirtualAGMstakingplace,theairwebreathehereinLuxembourghasneverbeencleaner!”smilesGrenner.“WehaveclientscomingovertoLuxembourgforboardmeetingsfromtheUSandAsia,aspartofawiderbusinesstriptomeetinvestorsandotherserviceprovid-ersinEurope.Ihaven’tseenanyproblemswithvirtualboardmeetings;buteventhoughyoucandoeverythingonlineitstilldoesn’treplacepersonalcontact.

“Thatbeingsaid,whileIdoubtwewillseemanagersgoingbacktofrequenttravellingjustforboardmeetings,Ithinkmanywillneverthelessbekeentogetbacktohavingclientandserviceprovidermeetings,toaddressfund-relatedissues.Ihopeweseeanequilibriumstruckbetweenmeetingsthat‘must’bedoneinperson,andmeetingsthatcanremainvirtual.Butifwe,asafundadministrator,haveagoodrelationshipwiththemanager,thenvirtualmeetingsareperfectlyokay.”

InEisen’sview,virtualAGMsmightbeanareawhereweseemoreenduringchangeswithinPEgroups,oncewegetpastthepandemic:“Speakingtomanagers,anumberofthemhavesaid‘We’vehadourAGMonlineandfoundwewereabletomakevideosandshowthemtoourinvestors,suchaspre-recordedvideosofourinvestmentprincipalstalkingaboutwhathadtranspiredoverthelast12months.Ourinvestorscanlogintolistentothemwhenevertheywant.’SomePEgroupshavealso

usedvideopresentationsfromCEOsoftheirrespectiveportfoliocompanies.”

Managerswillwanttore-establishclosecontactwithinvestorsandportfoliocompanies,post-pandemic,butvideotechnologywillallowthemtobemoreefficientwiththeirAGMs,goingforward.“Theycandopartofitvirtually,andcompressthelengthoftheirAGMs,whichsometimesgobeyondjustoneday;videocontentwillallowinvestorstodothingsintheirowntime.SoIthinkAGMswilllikelybecomeamixofphysicalmeetingsandweb-basedinteractions,”addsEisen.

CloudtechnologyhassupportedbusinessresilienceOneofthekeyconclusionstotakeawayfromthelast12monthsishowtechnology–drivenprincipallybyadop-tionofthecloud–hasmadeallthreeoftheabovetrendssoeasytoadopt.Theyhave,almostovernight,becomestandardpractices.Thefactthatglobalfinancehasoper-atedwithoutanyseriousshortcomingsunderscoreshowvitalaroletechnologynowplays,inallareasoffinance.

“Therehaven’tbeenanybreakdownsinservice,fromourperspective,becausetheamountoftechnologyusershasdramaticallyincreased,”commentsSinclair.“WhenMSTeamswasfirstlaunchedthreeyearsago,therewerecomplaintsabouthowwellitworked,whereasnowitisindustry-standard.IfMicrosofthadn’timprovedMSTeams,2020couldhaveendedupbeingaverydifferentyearforprivateequitygroups–andthefinancialindustryatlarge.”

Notthatremoteworkingiswithoutrisks.CyberattackshavespikedduringtheCovid-19pandemic,asthreatactorsseektoexploitvulnerabilitiesinhomeofficenetworkstoattackfinancialinstitutions.Thishasneces-sitatedtheneedforPEfirmstorelyontheirserviceproviderstoprovidestrictITcontrolswhenaccessingandsharingdata.

“That’spartandparcelofthisnewwayofworking–theamountofsecurityandAI-drivenantivirustoolswe

havetothinkaboutisbecominganincreasingchunkofourinfrastructurespendaswelooktoprotectourclients’datafromexternalthreats,”concludesSinclair.

TechnologyhasunequivocallyplayedakeyroleinhelpingPEfirmsremainoperationallyrobustoverthelast12months.Lookingahead,virtualfunctionsandpro-cessesaregoingtobecomeapermanentfeatureoftheprivateequitymodel,withAGMslikelytobethebiggestlong-termchange.

Thatsaid,onecannotoverlooktheimportanceofsub-stance.Covid-19pushedallsubstancerequirementsoutofscopeanditremainstobeseenexactlyhowtaxauthori-tieswilldealwiththetopicofvirtualAGMs,inapost-Covidenvironment.Inaworst-casescenario,itmayforceboardstorevertbacktoattendingAGMsin-person.n

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FindingvalueinLatinAmerica

BrazilprovidesPEinvestorswitharealroutetoLatAmopportunities

WhenitcomestoinvestinginLatinAmerica’spri-vatemarkets,Brazilleadstheway,accountingfor58percentofallPrivateEquityandVenture

Capitalinvestmentin2019,accordingtotheAssociationforPrivateCapitalInvestmentinLatinAmerica(LAVCA).

Someofthenotabledealscompletedlastyearincluded:SoftBankacquiringsharesworthUSD344millioninBancoInter;BrookfieldAssetManagement’sUSD1.8billionacquisitionofAscenty,aBraziliandatacentreoperator,inajointventurewithDigitalRealty;andHIGCapital’sacquisitionofglasswaremanufacturerNadirFigueiredoforUSD224million.

On20September2019,theBrazilianFederalGovernmentenactedFederalLawNo13,874(EconomicFreedomAct),whichestablishestheDeclarationofEconomicFreedomRights,withtheintentionofstimulatingeconomicactivitybyreducinggovernmentinterventioninprivateactivity.

Thiscouldwellencouragegreaterinvestmentactivityamongglobalinvestors.However,Brazilisnotforthefeinthearted.Itisacomplicatedcountryinwhichtodobusi-ness.ForglobalassetmanagerssettingtheirsightsontappingintoLatAm’spotential,Brazil–andmorespecifi-callySaoPaulo,thecountry’sdefactobusinesscapital

–isthego-tooptionforstructuringonshorefundvehicles.MauricioCarmagnani,CommercialDirector,InternationalMarketsatTMFGroup,comments:“CountrieslikeColombiaandMexicotendtofollowwhatcomesoutofBrazilandweseeawidenumberofglobalPEfirmssetting

uptheirregionalheadquartershereinSaoPaulo.”

Whenaskedwherehefeelsinvestorsmightfindvalue

inLatinAmericaoverthecomingyears,hepointsoutthatrecentdiscussionsinBrazilianlawinrelationtolandinvestments,meanthatforeigninvestmentownershipcouldgobeyondtheexisting25percentlimit.

“Thishastriggeredalotmoreinterestamongglobalrealestate/infrastructureinvestorsseekingtoacquirenotonlycorporateoffices,shoppingmalls,etc,butalsofarmlandthatrelatestotheagribusiness(Brazilstrongestindustry).

“Brazilianutilitycompaniesarealsointeresting,inlightoftherenewableenergytransition.Therearegoodopportunitiestoinvestinrenewableenergyassets.Theinfrastructureisgoodbutatthemomenttheseassetsdon’thavethecashflowsso