Summary of Proposed Investment
Project Number
10476
Company Name
Dynamo Puma II International
Date SPI Disclosed
Apr 13, 2001
Country
Brazil
Industry
other
Projected Board Date
May 20, 2001
Status
Completed
Sector
Foreign Portfolio Equity Fund - Country
Department
Equity Portfolio Management
Environmental Category
FI
Previous Events
Approved : Jun 11, 2001
Signed : Aug 31, 2004
Invested : Sep 20, 2004
Project Description
The project’s goal is to establish the US$100 million Brazilian Corporate Governance Fund. IFC would invest less of US$20 million or 25% of the Fund. A first closing of the fund may occur at US$50 million. The Brazilian Corporate Governance Fund will be a closed-end fund with an expected life of six years. Its objective is to create value for investors by identifying, investing in, and supporting mid-sized Brazilian companies committed to implementing the highest international standards of corporate governance, and which are also undervalued at current stock prices.
IFC''s role
IFC will send a clear signal of support to the Brazilian authorities and to a broad set of private sector actors who are pushing for changes to the legal and regulatory framework for corporate governance. In addition, IFC has a strong role to play by helping the sponsors structure the Fund. Most importantly, as a vocal proponent of improved corporate governance values in emerging markets, IFC''s presence as an investor in the Fund, and as a member of its investment committee and advisory board, will also be crucial to attract other investors both in Brazil and abroad.
Developmental Impact
Empirical evidence across countries indicates that more developed and more active capital markets are associated with higher rates of economic growth and that well-balanced financial systems with financial intermediation by both banks and capital markets can also absorb shocks better. Efficient capital markets enhance resource allocation, raise long-term financing for investment, and provide diverse financing opportunities for firms both directly and indirectly, by offering exit vehicles for venture capitalists. Addressing the corporate governance problem in Brazil is essential to develop the country’s capital markets and will depend, among other factors, on enhancing minority rights protection, strengthening the corporate governance of institutional investors, and expanding the structure and enforcement of regulation and supervision. If achieved, these improvements would result in higher firm valuation, lower cost of capital, and less profitable investment opportunities being bypassed.
IFC''s role
IFC will send a clear signal of support to the Brazilian authorities and to a broad set of private sector actors who are pushing for changes to the legal and regulatory framework for corporate governance. In addition, IFC has a strong role to play by helping the sponsors structure the Fund. Most importantly, as a vocal proponent of improved corporate governance values in emerging markets, IFC''s presence as an investor in the Fund, and as a member of its investment committee and advisory board, will also be crucial to attract other investors both in Brazil and abroad.
Developmental Impact
Empirical evidence across countries indicates that more developed and more active capital markets are associated with higher rates of economic growth and that well-balanced financial systems with financial intermediation by both banks and capital markets can also absorb shocks better. Efficient capital markets enhance resource allocation, raise long-term financing for investment, and provide diverse financing opportunities for firms both directly and indirectly, by offering exit vehicles for venture capitalists. Addressing the corporate governance problem in Brazil is essential to develop the country’s capital markets and will depend, among other factors, on enhancing minority rights protection, strengthening the corporate governance of institutional investors, and expanding the structure and enforcement of regulation and supervision. If achieved, these improvements would result in higher firm valuation, lower cost of capital, and less profitable investment opportunities being bypassed.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Stephen Dover
Investment Director
+55 11 3039 3721
+55 11 3039 3821
Av. Brig. Faria Lima, 1461-10 andar
01 481-900-Sao Paolo Brazil
stephen@bradesco-templeton.com.br
Investment Director
+55 11 3039 3721
+55 11 3039 3821
Av. Brig. Faria Lima, 1461-10 andar
01 481-900-Sao Paolo Brazil
stephen@bradesco-templeton.com.br