Brazil: International Investors Supporting the Economy

Oct 10, 2017

Graziano Messana underlines the Brazilian characteristics that attract foreign investors in the country. Despite being a country with a complicated tax system, you can count on partners like GM Venture to make your business in Brazil successful.

Find out what are the profitable activities in Brazil here.

Brazil: International Investors Supporting the Economy

The Brazilian “Tangentopoli” did a tremendous clean-up by re-establishing European standards with regard to transparency in procurement contracts. Brazilian companies, those that remained in the market, will still need some time for total rehabilitation, and in this context foreign companies can seize many opportunities.

“Large international funds such as Carlyle or L Catterton, but also big domestic funds such as Kinea or Vinci, have been raising capital recently and have exceeded approximately US$5 billion in this recent round, which is still in progress,” says Graziano Messana, the entrepreneur and manager, who has been living in Sao Paulo since 2006 and with GM Venture, a company he founded, represents several Italian and foreign companies that have invested in the country.
“L Catterton, the US fund that acquired the LVMH group’s private equity arm, has recently invested in Brazil, buying out a relevant stake from the minority shareholder of Eataly in the São Paulo branch. The Eataly Group has kept control of the venture, but the fund has already made other investments earlier this year by acquiring a chain of beauty clinics.”
The manager points out that some media have highlighted weaknesses that concern the Brazilian macroeconomic picture such as the instability of public debt or the inability of a political class to initiate the necessary reforms.
“Some media have emphasized the weaknesses regarding the country’s macroeconomic backdrop such as the unsustainability of public debt or the inability of a political class to govern by launching the necessary reforms. However, I perceive that the economy reacts and vibrates beyond the current political impasse and, on the contrary, the country is currently experiencing a phase of evolution, despite following a sort of obstacle course. In the midst of a political crisis, interesting privatizations are underway and a major labour law reform has been approved and will come into effect in November.”
“Regarding the dependence on other economies – Messana said – there is no doubt that Brazil has plenty of natural resources and a dependence on markets that buy sugar, meat, poultry, coffee, soy or iron ore but this is not the only reason why it values and attracts investments today.
“I would like to mention, for example, that Brazil is the third-largest country in the world in terms of social networks activity, enjoying around 140 million internet users and with an astonishing figure of about 50 million online/e-commerce buyers.
It is the third market in the world for beauty and personal care, and it ranks consistently in the top 5 positions in the markets for home appliances, medical devices and pharmaceuticals.
Despite the recent Brazilian crisis, areas such as digital security and renewable energy have been experiencing double-digit growth and remind me of the boom that took place in Europe years ago.
I would like to point out that, in line with the recent study carried out last May by Goldman Sachs examining this huge opportunity, we are experiencing an unprecedented growth within the Fintech sector, in a country where 80% of the financial market is dominated by three banks and 40% of the population (i.e. over 50 million people) has no bank account. In other countries such as the US (just to name one Brazilians often refer to), the relationship is actually reverse. When I mention huge I refer to the numbers that this industry will generate over the next few years”.
Brazil also has a negative record (according to the World Bank study) of being the most complex country in terms of tax compliance and this could scare companies to invest.
“We manage the interests of foreign companies investing in Brazil with the objective of creating value. We do it by evaluating since the beginning if the business/commercial idea, possibly identified by the parent company, will then turn into a real opportunity to repay the investment and distribute dividends at last.
Once the start-up is created, we structure all the processes by coordinating the actors involved such as banks, accountants, lawyers and acting as the local financial director since we know the pitfalls and complexities of the local market.”
“This is not just simple advisory – concludes Messana – but a direct Involvement in the daily management of the company.”

 

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