FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

Alternative Latin Investor, April 2011 – Issue 9

Alternative Latin Investor April 2011 – Issue 9

– Latin American Art
 Cuban Visions Event

-Hedge Funds             
 The business of running a hedge fund

-Agribuiness
Three strategies for investing in Latam Agriculture Sector
Bamboo for construction

-Infrastructure 
A look at infrastructure development in Argentina
 
-Real Estate             
Brazil’s real estate boom and the environment
 
-Venture                       
 Private Island Inc – International island brokerage
 
-Renewable Energy   
 Bio Fuel – Brazil vs. USA
 
-Regulation 
 Argentina’s legal update
 
-Profiles 
 Amaury Junior: CIO and Founder of Vision Brazil Investments 39
 
-Wine                           
  The newest designer labels…. in a glass
 
-Philanthropy    
 Accion: Microfinance in Latin America    
 

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Filed under: Argentina, Brazil, Chile, Colombia, Energy & Environment, Events, Latin America, Mexico, Peru, Risk Management, Wealth Management, , , , , , , , , , , , , , , ,

Alternative Latin Investor Issue 6 September/October

Alternative Latin Investor Issue 6 September/October 2010 click here for a free issue

Issue 6 Content Index

  • Infrastructure Municipal Bonds in Latin America
  • Emerging Markets Let the World See Your Wares in the Right Light
  • Investment Flows and Stock Market Returns p
  • Agribusiness Beekeeping in Latin America
  • Art Pinta: The Contemporary and Modern Latin American Art Show
  • Commodities The BP Oil Spill
  • Sowing Pools: Alternative Financing
  • Funds Latin America’s Favorite Sport: For Sale
  • Philanthropy Ashoka: Inspiring and Supporting Tomorrow’s Leaders
  • Regulation Due Diligence: You Bought the Company, Now What?
  • Renewable Energy Opportunities in Argentine Biodiesel
  • Ventures Real Estate Colombia: Founder Chad Smalley
  • Economist Emerging Market Forecaster
  • Wine Stocking up for World Cup 2014
  • Hedge Funds The Spectrum of Investors for Latin American Hedge Funds by Merlin Securities

Source: Alternative Latin Investor 22.09.2010

Filed under: Argentina, Banking, Brazil, Chile, Colombia, Latin America, Mexico, News, Services, Wealth Management, , , , , , , , , , , , , , , , , , , , , , , ,

The Definitive Brazilian Private Equity Guide: Part I

With all of the media surrounding the opportunities found in Brazil, TriCap Partners have created the a condensed guide, “Everything You Need to Know About Brazilian Private Equity” Part I.

Register here to download the special report for free

 

Challenges for Successful Private Equity Investments in Brazil

Someone forgot to tell Brazil that we’re in the middle of the worst global recession in history.

Brazil is quickly becoming a political and economic leader in Latin America and the world. As with the rest of the global economy, Brazil entered into a recessionary period in 2009, but economic data that have been emerging from the Instituto Brasileiro de Geografia e Estatística (“IBGE”) increasingly point to a stabilization in the economy, further suggesting that the country has perhaps been less impacted than other markets in this global recession. After the 4.4% quarter-on-quarter decline in 4Q08 and a subsequent 3.5% decline in 1Q09, the country’s GDP reached US$417.8 billion at 2Q09, up 5.2% from the prior quarter, and projected GDP growth for the second half of 2009 is running at about 4.0% or even higher (see Figure 1).

Many economists point to Brazil’s changing trade patterns as an important shield from the global recession as this year, for the first time, China overtook the United States to become Brazil’s single biggest trading partner. In addition, as copper and oil prices have remained relatively strong, Brazil’s commodity-based economy continues to demonstrate strong expansionary growth, and consumer spending, up 2.1% in 2Q09, represented the 23rd consecutive quarter of growth. Any PhD in economics can tell you, in technical terms, that this is ginormous.

Filed under: BM&FBOVESPA, Brazil, Exchanges, Latin America, Library, News, Risk Management, , , , , , , , , , , ,

SinoRock new star in China’s bank related assets/debts market

China’s NPL (Non-Performinb Loan) market is getting bigger, but the business model is changing to favore services-oriented local manager who have a large, local, sustainable and scalable operation throughout China.  Sino-Rock Investment Management Co Ltd based in HK brings a new dimension to NPL and Distressed Funds for Private Equity and Investors, with indepth knowhow, experience and understanding relations in China and the markets.  With the backing of its major shareholder Cinda (China’s largest AMC of NPLs), SinoRock is on the way to become the new star manager in China’s bank related assets/debts.

Foreign managers are losing NPL legal battles because their legal-battle oriented strategy is not working due to new policies and local cultures.  If NPL investment could be done by fighting legal battles, everyone could hire lawyers to fight legal battles to make profits.  That’s not the case  in China.

Source: SinoRock, October 2009

Additional News on China’s growing bank related assets/debts

Filed under: Asia, Banking, China, News, Services, Wealth Management, , , , , , , , , , ,

China Central Government Urged to Regulate Private Equity and Venture Capital

» The central government should assume regulation of private equity and venture capital firms, which are now mainly subject to local government rules, said Wang Ou, researcher at the China Securities Regulatory Commission.  He also urged regulators to treat such firms as financial institutions, contrary to their current legal status in China.  Wang said the CSRC is stepping up research on building a Chinese-style regulatory framework to support development in the private equity and venture.

Full article in Chinese 中国 Source: Caijing, 20.10.2009

Currently Private Equity firms are in a legal grey are, which allows Chinese firms to trade in overseas markets, and foreign firms to trade A-shares and Futures on Chinas Exchanges, without restriction and costly processes (in a stark opposited to QDII’s and QFII’s ), amongst other investment and trading activities.In contrast to the other non-regulated funds and trading firms, PE firms can apply for a foreign curreny account by SAFE introduce and retract large sum’s.

Note by FiNETIK, 20.10.2009

Filed under: Asia, China, News, Risk Management, Services, , , , , , , , ,

Latin America’s Pending Fire Sale

With multinational firms beating a retreat, local exporters under siege and plenty of overleveraged multi-latinas, private equity groups are licking their lips at the prospect of acquiring Latin American assets at fire-sale prices. Let the bidding begin.

John Price, Miami original article here

ImageExperienced Latin American investors understand that today’s financial crisis will present discounted buying opportunities to those with the authority and boldness to quickly negotiate an acquisition and the cash to pay for it. Six years of rapid growth in the region invited a lot of new players into the market, overcrowding supply in several sectors. Tight credit, faltering demand and falling prices put to the test the viability of many players, particularly recent entrants who may have overpaid to compete in the region. As a result, several sectors are overdue for some consolidation.

Different from the M&A dynamic of an expanding Latin America, acquisition opportunities present themselves very quickly in a down market, triggered this time around by exiting multinationals or over-indebted multi-latinas. After building a significant presence in Argentina, Brazil and Chile, Ryder Logistics, for example, was poised to enter the Colombian market in 2008 when global trade flows slowed and then collapsed, sparking a retreat by the company to its core NAFTA market position. Ryder’s exit from South America was swift and muted.

The financial need to focus on core and profitable markets is a strong motive for global firms to exit from Latin America, especially if they are recent arrivals still nursing a developing investment. Another motive may be the need to raise cash to repair a damaged balance sheet. RBS has been ordered by its new majority shareholder, the British Treasury, to shed assets, so it plans to sell operations of its subsidiary, ABN AMRO, in Argentina, Venezuela, Chile and Colombia. Retreating multinationals are the first and possibly the most attractively priced acquisition opportunities presented in the region.

The financial crisis hit Latin American markets anywhere from three to nine months after first striking in the U.S. It is only now that the need to consolidate in over-supplied sectors in Latin America is becoming evident. The first industries to feel the pain of falling demand are the region’s burgeoning commodity exporters. Junior mining companies in Peru and metal manufacturers in Argentina and Chile all share in common a rapid fall from grace as prices collapsed and their debt servicing costs skyrocketed thanks to scarce corporate credit. Cut off from capital markets, junior mining companies are busy flogging their new exploration properties in South America to the handful of cash-rich mining majors. But there are too many junior mining companies looking for too few majors, leaving many stranded and ready to sell to financial investors at discounted prices.

In Mexico, auto parts exporters have watched their U.S. customer demand collapse as two of three U.S. major car companies faced bankruptcy. The top 10 Mexican auto parts product category exports are anticipated to drop 50% from $53 billion in 2008 to $26 billion in 2009. The capital intensive industry cannot survive intact under the scenario of losing half of its revenue. During the last few years, many of Mexico’s auto parts exporters were able to borrow in dollars at historically competitive rates, assured of demand in the U.S. Now, with a devalued currency and rising corporate debt pricing, the Mexican auto parts sector is under attack from the revenue and cost sides of the ledger.

Across Latin America, trade with the U.S. will decline close to 40% in value and an estimated 10%-15% in volume. That will place enormous pressure on international cargo players, particularly air cargo in and out of South America, as well as cross-border trucking between the U.S. and Mexico. Latin American players in the space grew market share over the last six years, their expansion fuelled by access to cheap debt. They face the same margin squeeze as auto parts exporters with falling demand, weakened prices and growing finance costs.

After retreating multinationals and exporters under siege, the third source of distressed assets evolving from this crisis will be capital intensive service sector providers that took on too much debt too quickly in their effort to grow over the last six years. Retailing, consumer credit, construction, and tourism are all sectors that enjoyed spectacular growth and intra-regional investment in recent years.

Consumer credit grew by an average of over 20% per year between 2000 and 2007 (see Birth of a New Banking Model, Kroll Tendencias, April 2007). Construction grew on the heels of government spending while fiscal budgets in most countries expanded at 10%+ per year over the last five years. Latin American retailers like Pao de Açucar, Falabella and Soriana all fought back against the wave of foreign retailer investment and staked their claims, particularly in middle markets. Latin American hoteliers grew in multiple segments and now face falling demand from both international and domestic tourists. All of these industries were over built and face consolidation. The trigger point will be expiring debt contracts that force these over-leveraged players to shed non-core assets.

Due Diligence Is Key

All three areas of acquisition opportunity reward speed and boldness, the operational advantages of private equity and venture capital, as well as wealthy individuals in the region. The private equity sector raised record cash from 2006 to 2008 and is waiting patiently on the sidelines for the fire sale to commence. Strategic investors can join the party of buyers as well, but must take pre-emptive steps if they are to compete. They will need to line up funding from head office ahead of negotiations, much like a first time house buyer. Most importantly, strategic buyers need to identify targets with sufficient time to conduct reputational due diligence before engaging in negotiations, when financial and legal due diligence activities usually begin. In a time-compressed buying process, due diligence must be swift and pre-emptive.

Due diligence must also be thorough. Fire sales are fraught with risk because the seller is operating from a position of weakness and has every incentive to hide potential liabilities in the hope of pushing through a quick sale that preserves maximum value of its assets. Certainly, the ability to purchase discounted assets allures buyers, but the degree of liability can often overshadow the rewards. The most common liability of cash-strapped companies is the non-payment of taxes, particularly value added sales taxes, a form of tax evasion that is a criminal offense for business owners and board members in some Latin American jurisdictions. Other liabilities include unpaid worker wages, AML non-compliance, FCPA non-compliance, as well as internal fraud. Understanding these issues ahead of negotiation may be the key to purchasing at fair market value. Knowing the full extent of any liabilities may be vital to avoiding a regretful acquisition.

The Author: John Price ( // <![CDATA[// <![CDATA[
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jwprice@kroll.comjwprice@kroll.com// <![CDATA[// <![CDATA[
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Source: Kroll Tendencias Infoamericas, August 2009


(Note: This article first appeared in the Latin American PE VC Report, the official newsletter of the Latin American Venture Capital Assoc. (LAVCA). You can access the report at www.latinamericapevcreport.com .)

Filed under: Argentina, Brazil, Chile, Colombia, Latin America, Mexico, News, Peru, Services, Venezuela, , , , , , , , , ,

Shenzhen Stock Exchange: The 7th SMEs Financing Forum Kicked Off Yesterday

The 7th Small and Medium-Sized Enterprises (SMEs) Forum jointly sponsored by the Ministry of Industry and Information, the National Development and Reform Commission, the Ministry of Science and Technology, the Shenzhen Municipal Government and the Shenzhen Stock Exchange (SZSE) was held yesterday in Shenzhen.

The forum discussed a series of topics such as new challenges the SMEs are facing under the global financial turmoil, how to boost investment, financing and innovation of SMEs, capital market’s role in deployment of innovative resources and improvement of market’s capability to serve economic entities with focus on serving economic entities and SMEs financing under global financial crisis and further study on concept of scientific development.

SHANG Fu Lin, Chairman of the China Securities Regulatory Commission addressed on the forum while several other principals also made speeches.

SHANG noted that China’s stock market is quite volatile amid the financial turmoil, which pushes us to keep exploring working rules of the market and deepening our knowledge on the market.

He also said that the capital market is a derivative of the opening-up reform and a significant part of socialism with Chinese characteristics and powerhouse for rapid and healthy development of national economy. The capital market has been acting more and more important role in social and economic development during the past a few decades. Listed companies aggregately accomplished business income of 8.6 trillion for the first three quarters of this year, equivalent to 42.8 percent of GDP figure for the same period. By the end of October, stock market has raised 2.3 trillion yuan while bonds raised 1.3 trillion. Root for the America-oriented crisis should be analyzed and experiences should be collected to advance supervision over securities market.

The internal rules of market evolvement should be acquired to launch new financial products tailored for economic development while sticking to basic situation and market order of China.

Expanding domestic consumption and advancement of economic development are priorities of current tasks. Acquisition of listed companies is encouraged to boost adjustment of industrial set-up. SMEs should be given more support, guiding and subsidies. The SMEs Board has been acting important roles in guiding and regulating SMEs since its establishment four years ago. Bonds market is to be developed to tackle difficulties for this industry. Regulations and compliance should be tightened to timely settle irregularities.

LIU Yan Hua, Deputy Minister of the Ministry of Science and Technology expressed that confidence is the key to integrate finance and technology for setting up pf a scientific and technological finance system in a bid to bolster growth of multi-layered capital market and growth board.

Given the current obstacles, policies on credit and taxation should be adjusted and SMEs credit guarantee system optimized to help SMEs, said OU Xin Qian, Deputy Minister of the Ministry of Industry and Information.

TU Guang Shao, Vice Mayor of Shanghai, pointed that financial connections between SMEs should be founded to factually fix fund-raising problems.

Several economists said that technological innovation has become the engine to sustainable development of Chinese economy under the current circumstance. The Growth Board is a substantial mean for enterprises to move towards innovation.

CHEN Dong Zheng, Director of the SZSE, chaired the forum and expressed that short-term capital cannot solve fundamental fund-raising problems, which urgently needs the capital market to bail them out. Capital market can shore up economic development under effective regulations. There has been a set of scrutiny system working over the current capital market and Chinese listed companies and securities intermediates are working properly who are eligible to further push the capital market move forward.

Roughly 500 people attended the forum including representatives from venture capital institutions, listed companies and correspondents.

Source: Mondovision / Shenzhen 2.11.2008

Filed under: Asia, China, Exchanges, News, , , , , , , , , , ,