JP Morgan launches a closed-end fund focuses in Brazil. This is the first London-listed vehicle to focus solely on Brazil. In fact, Brazil is the last BRIC to have his dedicated fund. Over the past 17 years, the same stable has launched dedicated funds invested in China, India and Russia.
“The specific attraction of JP Morgan Brazil is its ability to pick from among 200 high-growth mid and small-cap companies that are poorly represented in stock market indices. These range from Totvs, a developer of accounting software for smaller businesses to Lojas Renner, the department store operator spun out from America’s JC Penney. The fund plans to hold between 25 and 50 stocks in all, including companies undergoing restructuring, and, in some cases, private equity”, says the Times Online.
One thought on “You were looking for a vehicle to invest in Brazil?”
I am posting an article about BNDES from The Economist. I’m interested in the relationship between state agencies, such as BNDES, and private companies. I think that this is an interesting topic, too, in the United States, for example, the relationship between public pensions, like CalPERS, and private companies.
Brazil’s development bank
Apr 16th 2009 | SÃO PAULO
From The Economist print edition
Rediscovering the charms of BNDES
WHEN the National Bank for Economic and Social Development (BNDES), Brazil’s development bank, was born in the 1950s the country was planning its new capital, Brasília. The city was designed around cars and the bureaucrats who would drive them, from their homes in a district of apartment blocks to one of the ministries in the government district and then, perhaps, to a restaurant in the leisure district. There would be no traffic lights. Everything would be perfectly rational. Faith in BNDES waned along with faith in civil servants. But now that most governments own a bank or two, BNDES is back in fashion.
In truth the bank never lost its importance as a provider of long-term financing to companies in Brazil. Lending to the government, via the bond market, is so profitable and so liquid that it has crowded out the development of a market in long-term corporate debt. BNDES’s lack of competition and privileged funding saw its assets grow to 277 billion reais ($120 billion) by the end of 2008. But since credit became scarcer in Brazil last year the bank has added to its role as a financier of projects, and has stepped in to provide shorter-term working capital and trade finance to companies that saw their usual lines suddenly vanish.
BNDES has not always played so helpful a role. In the past its funds were sometimes handed out according to political expediency, to dying companies and in pursuit of a patchily successful industrial policy. The government still has a thing about helping to create big companies that can conquer rivals abroad—BNDES is now helping to finance projects carried out by Brazilian firms elsewhere in South America. But there is less political lending, perhaps because Brazil’s companies are in better shape.
The bank also argues that its employees, career civil servants who enjoy jobs for life, are resistant to political pressures as a result. BNDES’s administration is slim given the big numbers involved. And it turned a healthy profit of 5.8 billion reais in 2008.
Yet BNDES remains a symbol of a credit market that is not working properly. Those parts of the economy with political clout, like farming and housebuilding, get subsidised credit from state-owned lenders whereas ordinary customers pay through the nose. Useful though it is right now, BNDES and its other state-owned brethren should not still be taking up so much of the road.