BNDES - Annual Integrated Report 2018

Our support for UP! Licensing is part of the consolidation strategy of the Brazilian audiovisual industry, which aims to make companies more competitive, including in the foreign market. The company is part of a group that sells products in more than 2,000 points of sale throughout Brazil and that owns the property rights of the personages of “Bubu and the Owls.” Based on an inverse logic, the company decided to develop an animation series after the success of the characters in the retail market, which is currently broadcast by Disney Channel and TV Cultura in Brazil, and Disney Junior and Playkids in Latin American countries. The project had our financial support for the business plan, contributing to maintain qualified professionals in the region of the state of Santa Catarina.

In August 2018, we launched, together with the state of Espírito Santo, a public call to support projects aimed at production, agro-industrialization, processing and marketing of projects of associations and cooperatives of family farmers, in order to qualify their productive structure. We also launched a public call in partnership with the National Union of Cooperatives for Family Farming and Solidarity Economy (Unicafes) to select projects with the objective of promoting the reduction of social inequalities, socio-productive inclusion and territorial development.

In 2018, we contracted two operations to support electric vehicle recharge network projects, in a total amount of R$ 6.7 million. The initiatives, selected through a public call launched in 2016, will receive nonreimbursable funds from BNDES Funtec. They will also have financial support from Embrapii, under a cooperation agreement signed with BNDES in 2017. The two projects are aimed at developing models of slow (eight to 16 hours), semi-fast (two to four hours) and fast (up to one hour) recharge station models that can be installed in residences, shopping malls, parking lots, petrol stations and highways.

With our financing, the Lunelli Group, which operates in the textile sector, was able to invest in fashion research, development and prototyping of products and actions to strengthen its brands. The investments were strategic for the group to increase its participation in the market in a moment of low performance of the textile sector in general. In addition, the resources allowed expansion of the production facility located in the city of Maracanaú (CE), guaranteeing the opening of 178 new jobs in the factory and allowing the reengineering of the unit’s processes and the expansion of the built area in 5,000 m² , destined to logistic activities.

In 2018, we disbursed R$ 4.2 billion for exports, with R$ 3.9 billion in the modality of post-shipment financing for the marketing of products and services, and R$ 267 million in pre-shipment operations to finance production of goods and services. The United States was the main recipient of these exports, and the main sector financed was aircraft manufacturing. In 2018, 46 out of the 90 commercial aircrafts delivered by Embraer were financed by BNDES, totaling US$ 966 million, which leveraged US$ 1.5 billion in exports of the aeronautics sector. The funding was allocated to four airlines in three countries: USA, Norway and the Republic of Belarus.

In 2018, we adjusted BNDES Microcredit line to the rules of the National Program of Oriented Productive Microcredit (PNMPO), which allows us to be even more integrated with a public policy that, in addition to providing resources to lower-income microentrepreneurs, offers technical support for carrying out the activities of the projects. Silvana Melo da Rosa opened her own textile waste recycling business in the municipality of Ascurra (SC), and currently has eight employees in her shed. At the beginning of her project, she had only two employees, but with high demand, in a few months she needed to hire more people. Silvana has already used two credits from ICC BluSol, from BNDES Microcredit line funds, for construction of her shed and bathrooms, the purchase of fans and drinking fountains, etc.

In 2018, we launched the public call “BNDES Connected Education – Implementation and Use of Digital Technologies in Education” with the purpose of selecting projects for the incorporation of technology into public education, in order to support – with nonreimbursable resources from the Social Fund – its adoption in primary and secondary schools of state and municipal networks, testing more effective models for its implementation. After technical analysis and draw, ten projects were selected out of the 26 presented, totaling a support of R$ 40.4 million. Six projects have already been approved (RS, TO, SE, PB, MG and GO), of which the first four are already contracted and predict impact in 269 schools, 105,000 students and 8,100 teachers. Another four (AP, BA, RR and PR) are waiting for budget availability from the Social Fund in 2019.

Since 2012, under an R$ 1.5 billion contract, we have financed Senai for investment in labor qualification and productivity and technological innovation in the domestic industry. In 2018, the disbursement totaled R$ 101 million. The investments comprise three fronts: technical and vocational education; technical and technological services for industry; and research, development and innovation for industry. These fronts are reflected in projects for the implantation, modernization and/or expansion of 19 Senai Institutes of Innovation, 35 Senai Institutes of Technology and 152 vocational training centers, in addition to the acquisition of 85 mobile units of technical education.

In December 2018, the Nature Museum was inaugurated in the Serra da Capivara National Park, in Piauí. Its construction received our nonrefundable support in the amount of R$ 13.7 million. The museum houses a collection of macrofauna fossils that would have inhabited the region and deals with climate change that occurred about 10,000 years ago on the site. Part of the collection is composed of species discovered in the region, while another part is formed by animals that today only exist in the Amazon biome.

Joinville Children’s Hospital is part of the public hospital network of the State Health Secretariat and is the first center already in operation of a group of five hospitals that are subject to expansion and modernization with our support. The hospital offers care for children and adolescents, and it is a reference for 25 municipalities in the Northern and Northeastern regions of the state of Santa Catarina, besides serving as a reference nucleus in various specialties for children and adolescents in the whole state. The services performed with funding resources included, among others, renovation and modernization of existing facilities, adaptation of the hospital to the requirements of the Fire Department, and creation of the hospitalization and psychiatric coexistence wings.

We supported the action plan of Nortec Química S.A. for the triennium 2018-2020, which covers the development of new products, including antidepressants, antiretroviral drugs and treatments for Parkinson's disease. In addition to investments in physical infrastructure and research and development laboratories, support for the company totaled R$ 26.3 million. Located in the city of Duque de Caxias (RJ), Nortec is the largest national manufacturer of active pharmaceutical inputs and an important Ministry of Health’s partner, providing active principles for the production of drugs for the treatment of AIDS, hepatitis C and some neglected diseases, such as Chagas disease and filariasis.

As part of the plan to adapt the infrastructure of the prison system in the state of São Paulo, we supported the construction of 12 prison units, including five women's penitentiaries, three temporary detention centers, three men’s penitentiaries and a penitentiary progression center. All units are ready, with the exception of one, still under construction. The Guariba Women's Penitentiary was inaugurated in March 2018, with a built area of 17,000 m², with capacity of 744 inmates in closed regime, as well as a ward of penitentiary progression, with capacity of 108 women.

We have conducted over the last years an extensive study on the theme “Internet of things: an action plan for Brazil,” carried out in partnership with the Ministry of Science, Technology, Innovation and Communication (MCTIC). The year 2018 was marked by the conclusion of this work, defining the basis for a national plan and a strategy for implementing IoT in the country. As a first action aimed at implementation, in June 2018 we launched the BNDES IoT Pilots, a public call for the experimentation of IoT solutions for cities, health and rural environments. Fifteen out of fifty projects received were selected from all regions of the country for the internal analysis phase. For the industry, the fourth environment prioritized in the study, a partnership with Senai and Embrapii was established for nonreimbursable support directed at the innovation plans of Senai network’s institutes and technology centers for development of pilot projects.

In order to stimulate innovation and entrepreneurship as leverage for development, we launched in 2018 the BNDES Garagem project, which complements our traditional ways of support based on two initiatives. The Startup Development Program aims to support the development and growth of this type of business and the strengthening of the entrepreneurial ecosystem. The program offers training and qualification to entrepreneurs and emergent companies, with priority for those working in the areas of education, health, safety, financial solutions, creative economy, environment, blockchain and IoT technology. The second initiative is aimed at creating an innovation center that works as an innovative business development environment and a hub to connect the various agents of the ecosystem – startups, medium and large-sized companies, investors, universities and research centers.

As co-operators of Fibria, together with Votorantim, we actively participated in the negotiation of the operation of combining the business of Suzano with those of Fibria. Through the operation, BNDESPAR received almost R$ 9 billion, in addition to Suzano’s shares, representing 5.5% of its capital. This operation generated profit of approximately R$ 5.5 billion, the highest profit in our history in an individual operation. The company resulting from the business combination between Fibria and Suzano is listed in the Novo Mercado, B3's top corporate governance segment. During the negotiations, we contributed to Suzano raising its corporate governance standards even further by adopting a policy of nominating independent directors, with stricter criteria than Novo Mercado. We also negotiated Suzano's commitment to maintain Fibria's social and environmental practices, a company that has always been a benchmark in the industry, listed in the Dow Jones Sustainability Index several times.

We sold our stake in Eletropaulo, an electric power distribution company in the state of São Paulo, for the amount of R$ 1.4 billion. The winner of the auction for the acquisition of the company’s shares – Enel Brasil Investimentos Sudeste S.A. – engaged to capitalize Eletropaulo at R$ 1.5 billion, as well as contributing with technical knowledge to solve the company's main problems, especially with regard to operational efficiency and quality of service rendered. We had shares in Eletropaulo's capital from the end of 2016, through BNDESPAR, and helped promote a series of governance improvement measures that culminated in the migration from Eletropaulo to the Novo Mercado in November 2017. Measures were also implemented to create a favorable environment to attract investors and unlock the company's value. Between 2016 and 2018, the asset appreciation was of the order of 300%, and the value of our shares jumped from R$ 350 million to R$ 1.4 billion. In the same period, Ibovespa had 30.5% appreciation, and the energy index, 16.3%.

We approved the first national venture debt fund in the year. The fund, which will be managed by SP Ventures, will provide credit to innovative small and medium-sized companies with revenue of a maximum of R$ 90 million. We can invest up to R$ 80 million. The remaining funds shall be raised with other investors, and the total equity expected for the fund is up to R$ 160 million.

In December, we launched a multi-sectoral public call for up to eight equity investment funds (FIP), and up to four in each category: venture capital and private equity. The assets committed by BNDESPAR in the eight funds might reach R$ 2.2 billion. Through these investments, we seek to prioritize solutions in education, health, public safety and infrastructure, in line with our strategic planning.

We launched, in partnership with the Banco do Brasil Foundation (FBB), a call for public selection of projects for reapplication of social technologies. The objective is to select projects that aim to promote the generation of work and income in any part of the country, based on new applications for existing social technologies. We have received 427 proposals, and 148 were approved in the first stage. The financial resources available should allow hiring the 11 best classified proposals. The other qualified proposals will compose reserve records, obeying the classification order obtained, for a period of 12 months from the publication of the final classification.

In 2018, the Amazon Fund completed ten years of existence, consolidating itself as the main worldwide initiative of the payments system for results achieved in reducing deforestation. Donations received amounted to R$ 3.4 billion (94% from Norway, 5.6% from Germany, and 0.4% from Petrobras). In 2018 alone, Norway donated approximately R$ 272 million. In early 2018, we launched a new and more modern website, with new features that provide the user with easier access to all available information about the fund and projects supported. In 2018, 11 new projects were approved in the fund scope, among them the support for activities of environmental inspection and control of deforestation in the Legal Amazon by IBAMA, and the support for the consolidation of the Brazil nut production chain, and the strengthening of productive activities related to açaí, cassava flour and natural rubber in two indigenous lands and three extractive reserves in Rondônia.

Throughout the year, we actively participated in the elaboration of strategic agendas for the development of the North, Northeast and Central-West regions, under the coordination of the Ministry of National Integration (current Ministry of Regional Development), aimed at inserting the regional agenda in the process of preparing the PPA 2020-2023, following the objectives and sectoral axes of the National Policy for Regional Development (PNDR). The map on the side shows our contribution to dynamizing regions with lower economic density, in line with the Regional Policy and Strengthening of Cities Network (PDRC), which defines as priority territories those with per capita household income inferior to 75% of the national average.

Another financial support focused on territorial development is support for the municipalities’ public management through BNDES Pmat. Its objective is to enable a qualitative increase in management, generating an increase in tax revenue and/or a reduction in the cost of services to the community. Among the impacts observed by the implementation of the program, we can highlight the increase of municipalities’ tax revenue, reduction in the processing time of processes and provision of information for the citizen, including, in some cases, solutions of problems via web or applications for mobile devices. Currently, we have 56 BNDES Pmat operations in our portfolio. Together, such operations amount to approximately R$ 1.5 billion, among projects contracted, approved and those under analysis.