» Purpose

Select funds, through BNDESPAR, in Private Equity shares - FIPs (*) – and Venture Capital shares - FIEEs (**), totaling eight FIPs and two FIEEs, with the following purpose: 

expand, through investment funds, the support to capitalization of business corporations of different sizes, also spreading out good governance practices and the risk capital culture in Brazil; and 

leverage private investors’ support to projects in the sectors prioritized by BNDES System. 

(*) Private equity funds are those intended to mid and large-sized companies/projects regulated by the Brazilian Securities and Exchange Commission’s Instruction nº 391, of July 16, 2003, and further amendments.

(**) Venture capital funds are those intended to emerging companies, as defined in the Brazilian Securities and Exchange Commission’s Instruction nº 209, of March 25, 1994, and further amendments.


» Effectiveness

07.08.2010


» Budget

R$ 1.5 million 


» Maximum Share of BNDESPAR

Private equity funds: Up to 20% (twenty per cent) of the committed equity; 

Venture capital funds: Up to 25% (twenty five per cent) of the committed equity; 


» Types of Spread

Management fee 

For funds with committed equity equal or higher than R$ 200 million, the management fee will be up to 1.5% p.a. on the committed equity or R$ 4,000 thousand/year; 

For funds with committed equity equal or higher than R$ 100 million and lower than R$200 million, the management fee will be up to 2.0% p.a. on the committed equity or R$ 2,500 thousand/year; 

For funds with committed equity equal or higher than R$ 60 million and lower than R$100 million, the maximum management fee will be up to 2.5% p.a. on the committed equity or R$ 1,800 thousand/year; 

For funds with committed equity equal or higher than R$ 30 million and lower than R$60 million, the management fee will be up to 3.0% p.a. on the committed equity; 

In the investment period, the management fee may be applied on the committed equity, and must then, be applied on the shareholders’ equity or capital invested in the fund, minus disinvestments and repayments made over time. 

For funds with committed equity equal or higher than R$ 200 million, BNDESPAR, even after selecting the Manager, may, in the due diligence phase, request the budget of monthly expenses to be covered by the Fund’s management fee. As a result, it may place its share in the fund contingent upon the decrease of the said fee. 

Performance Fee

It will be 20% of the gains distributed by the funds exceeding the original capital invested, restated by the variation of an inflation index (INPC, IPCA (Extended Consumer Price Index), etc.), plus an opportunity cost. The performance fee amount will derive from the following formula:

Tp = (Va - (Cc - Vp)) x 20%

where:

Tp = Performance Fee;
Va = The amount distributed to the shareholders for the purposes of repayment or upon settlement of the Fund;
Cc = Cost of subscription of shares of the Fund, restated, on the pay-up date up to the calculation date, by the variation of a pre-defined inflation index, plus an opportunity cost;
Vp = Sum of the amounts distributed to the shareholders, restated since the date of its distribution up to the calculation date, by the variation of the same inflation index applied upon the restatement of Cc, plus an opportunity cost limited to the Cc amount.

Performance fees will only be due when the result of the formula above is positive. The fee is also contingent upon the paying-up of the entire committed equity of the Fund or after the end of the investment period, whichever comes first. 


» First call for selection of funds

In this first call, the three private equity funds will be selected, with the following investment policies: 

1. one in the agribusiness sector; 
2. one for the ethanol production chain and/or generation of energy through biomass (cogeneration with sugarcane waste, biodiesel, etc.); and 
3. one for governance increment, with no sector focus. 

The following calls will take place based on a previous assessment by BNDES, at the time of the call, of the market opportunities and the priorities of BNDES System. 


» Criteria for the selection of funds

Eliminatory Criteria

Non-alignment of the model and/or focus of investment of the fund with BNDES’ priorities defined in the said call, through the Program; 

Litigations before the Brazilian Securities and Exchange Commission, institutions controlled, direct or indirectly, by the Federal Government, or other institutions that the BNDES System, at its sole discretion, considers impeditive in the selection process; 

Spread proposed by the manager not consistent with the fees defined in the Program; 

RECEIPT lower than 3.0 in the classification criteria; 

Classification Criteria

Each manager who submits proposals to BNDESPAR will be assessed according to the classification criteria below, to which the following weights apply: 

Fitness and experience of the team in the sector/subject-matter of the fund - weight 4; 

Experience of the tea, in capital market operations - weight 3; 

Team’s joint work background - weight 2; 

Governance model of the manager and the fund (decision-making structures, information management, transparency, conflicts of interest, etc.) - weight 2; 

Presentation of potential businesses: Presentation of project portfolio or potential companies for potential Fund investments - weight 3; 

Participation of manager as a shareholder - unit 1; 

Capability of attracting investors for the Fund - weight 2; 

Management fee (cost related to the others) - weight 1; and 

Performance fee (cost related to the others) - weight 2. 

Total of 20 points 

The grades for the classification criteria will range from 1 to 5 and the FINAL GRADE will be the weighted average of these criteria. 

Notes:
Managers who present the smallest absolute value will be assigned grade 5.0 and Managers who present the highest absolute value will be assigned grade 1.0, resulting from the application of the management fee (percentage on the equity) on the reference base. The grades to the other competitor Managers will be calculated by a linear interpolation between the maximum and minimum limits. 

The grade will be divided in two parts with equal weights (50% for each part). In the first part, related to the opportunity cost, grade 5,0 will be assigned to the Managers who present the highest percentage value of the opportunity cost and grade 1.0 for the Managers who present the smallest percentage value of the opportunity cost. The grades to the other competitor Managers will be calculated by a linear interpolation between the maximum and minimum limits. In the second part, related to the performance fee percentage, grade 5.0 will be assigned to the Managers who present the smallest percentage and grade 1.0 will be assigned to the Managers who present the highest percentage. The grades to the other competitor Managers will be calculated by a linear interpolation between the maximum and minimum limits. 

The FINAL GRADE is calculated by the formula



Where pi is the weight of the i-th item and ni is the respective grade. 


» Addressing

Proposals of managers interested in participating in one or more of the types above in this first call must be prepared in separate and submitted upon Previous Inquiry to the Investment Funds, according to the Information for Selection and Eligibility of Private Equity Funds. 

After submitting the Previous Inquiry for Investment Funds to BNDES, the Managers and their team will be called to present the proposal to BNDES Securities Committee, on a date yet to be defined. Proposals will be assessed according to eliminatory and classification criteria described above.