Panel - The Private Equity Industry in Latin

America“Brazilian Private Equity Focus”

March 2008

1

Agenda

• Brazil Macroeconomic Overview

• Private Equity in Brazil

• Improvement of Brazilian Capital Markets

• Private Equity/Venture Capital Players

• Bios

2

Brazil Macroeconomic Overview

3

Brazil Macroeconomic Overview: in a nutshell

• Consolidated democracy and free press

• Transparent and sound fiscal position

• After decades of high inflation, expectations are well-anchored and the Central Bank enjoys considerable credibility

• Much more integrated into the world economy: trade has grown 161% over the last five years

• FDI reached US$ 34 billion in 2007

• Diversified economy with leading global companies

• Macroeconomic stability and openness has had positive impacts on productivity and poverty alleviation

4

Brazil Macroeconomic Overview: healthy macroeconomic scenario

Falling real interest rates

BRL/USD Real Exchange RateImproved country risk (EMBI+)

International reserves

1.70

1.85

2.00

2.15

2.30

2.45

2.60

2.75

2005 2006 2007 2008

R$/U

S$

6%

7%

8%

9%

10%

11%

2005 2006 2007

100

300

500

700

900

1,100

1,300

1,500

2003 2004 2005 2006 2007 2008

0

20

40

60

80

100

120

140

160

180

200

2004 2005 2006 2007

US$

Bi

5

Brazil Macroeconomic Overview: healthy macroeconomic scenario

GDP growth 4Q moving average

Trade flow and FDI (accumulated 12 months)Labor Productivity (accumulated 12 months)

Inflation YOY (%)

0%

1%

2%

3%

4%

5%

6%

2000 2001 2002 2003 2004 2005 2006 20070

2

4

6

8

10

12

14

16

18

2000 2001 2002 2003 2004 2005 2006 2007 2008

0%

1%

2%

3%

4%

5%

6%

7%

2002 2003 2004 2005 2006 200750

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2008

0

5

10

15

20

25

30

35

40

Trade Flow FDI

6

Private Equity in Brazil

7

Summary of historical Events per “cycle”

Before Real plan First CycleReal Plan

Second CycleEconomy slowdown

Third CycleMore stable economy

• Difficult environment for doing business• Economic recession• High inflation• Growing social tension• Defaults in the 80’s • Impeachment• No legal environment• High uncertainty

• CVM Norm regulating Mutual Investment Funds in Emerging Companies (FMIEE)• Privatizations• Internet bubble• Economic slowdown• International crisis• 1999: Real devaluation• 2001: Brazil Energy crisis • 2002: Lula’s election• Lack of capital market• High interest rates

• 2000: BOVESPA Listing Segments for Brazilian Companies with better practices of Corporate Governance • 2003: CVM instruction 391 regulating Investment Fund in Participation (FIP)• 2004: New Bankruptcy Law • 2005: Recognition by Brazilian Supreme Court (STJ) of international arbitrage increased use of Arbitrage Chambers

• High liquidity period • Stronger institutions• Better legal environment• Brazilian economic conditions improved• Brazilian Capital Market experienced unprecedented development• Foreign investments flew to Capital Market• PE Exits through IPO• Impressive increase in PE fund raising

1994 1999 2004

8

Private Equity in Brazil: Committed Capital

Source: GVcepe – Published in O Salto do Capital Produtivo – Valor Financeiro Especial – setembro 2007

3.7

5.0 5.04.7 4.8

5.6 5.6

12.7

16.7

0

2

4

6

8

10

12

14

16

18

1999 2000 2001 2002 2003 2004 2005 2006 2007

US$

bill

ion

9

Private Equity in Brazil: Investments

Private Equity investments growing as a % of GDP in Brazil:

2004: 0.04%

2006: 0.38%

2007: 0.93% (estimated)

UK in 2004 rate was 1.11%

10

Private Equity events per “cycle”

Before Real plan First CycleReal Plan

Second CycleEconomy slowdown

Third CycleMore stable economy

• Brasilpar (1981) and CRP (late 1981) were pioneers in Brazil• BNDESPAR creates in 1988 the Capitalization Program of Technology Companies (CONTEC) targeting small and middle technology companies• Partner of BancoGarantia acquired Brahma (1989) and Lojas Americanas(1983)

International funds• Advent (1997)• Darby Overseas: (1995)• Merrill Lynch Global Private Equity: (1997)• Hicks Muse• TPG• ING-Barings (1996)

Brazilian funds• Patria (1994)• GP• Pactual Electra

Leap from 8 funds in 1994 to 45 in 2000

• It took very long for the first funds to divest in Brazil• Many had mediocre returns because of Real devaluation• IPO was not a possible exit• It was very hard to raise money for Brazilian PE funds• Many international funds left Brazil• International funds who took an “opportunistic” approach and diversified in Latin America countries were better off

• Brazilian Private Equity Industry is now more than 10 years old;• Expertise was created;• Professionals in PE/VC2004: 498 professionals 2007: 984 professionals (375 Managers and 627 related activities)

• Specialization of related service providers: consulting, auditing and tax, lawyers.

• ABVCAP organizes seminars, congresses, meeting, actively participated in the regulation of PE/VC industry

1994 1999 2004

11

Private Equity in Brazil: PE-backed IPOs evolution

PE-backed IPOs

121131

5.9

6.9

2.8

0.7

0

2

4

6

8

10

12

14

2004 2005 2006 2007

0

1

2

3

4

5

6

7

8

US$

bi

# transactions Volume

12

Improvement of Brazilian Capital Markets

13

IPOs: Number and Total Volume

IPO's: Number and Total Volume(include Follow-os)

15 22 42 70

3

7

23

14

0

10

20

30

40

50

60

70

80

2004 2005 2006 2007

0

5

10

15

20

25

US$

bi

# of IPOs and Follow-ons Volume

14

M&A Activity evolution

Evolution of M&A activity

677473365299230227340

14.9

54

57.7

17.123.1

1517.5

0

100

200

300

400

500

600

700

800

2001 2002 2003 2004 2005 2006 2007

0

10

20

30

40

50

60

70

US$

bi

# transactions Volume

15

0

100

200

300

400

500

600

700

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

US$ b

illion

Bovespa traded volume evolution

First Cycle Second Cycle Third Cycle

16

Improving Corporate Governance

Improving Corporate Governance

0

50

100

150

200

250

300

350

400

450

2003 2004 2005 2006 2007

IBCG IBOV

368

287

From Jan/03 through Jan/07, Brazil’s

Corporate Governance Index has gained

268% significantly outperforming the 187%

appreciation of the Bovespa over the same

period

17

Private Equity/Venture Capital Players

18

Private Equity/Venture Capital Funds Investing in Brazil

Leading Local Private Equity players, focused in Brazil:

– Gávea

– GP

– Pactual

– Patria

– Tarpon

– DLJ South American Partners

– Dynamo

International Private Equity funds, focused in Latin America/Brazil:

– Advent

– AIG

– Capital Group

– Carlyle

– Darby

19

Private Equity/Venture Capital Funds Investing in Brazil

– Platforms for consolidation opportunities:• Patria: healthcare and diagnosis centers (DASA), Educational (Anhanguera

Educacional)• Monte Cristalina: Consumer Brands• GP: Shopping Centers - BR Malls – more than 20 acquisitions in 2007• Pactual: Fashion Brands

– Opportunistic and minority stakes:• Gávea• AIG• Eton Park

– Opportunistic and control stakes:• Advent• GP• Gávea

– Infrastructure Focus• ABN-Amro – InfraBrasil• AG-Angra Partners• Banif

– Bioenergy and Agribusiness focus• Brenco• Riverstone/Carlyle

20

Local Institutional Investing in Brazil

Brazilian pension funds are investing more in Private Equity/Venture Capital due to falling interest rates.

BNDES:

– Investing in 8 PE funds focusing mainly infrastructure, biotechnology, IT and new materials (R$ 670 mm)

– Venture Capital: Investing in 15 funds - R$ 280 million.

– Seed capital: Criatec (BNDES is the only contributor)– focusing innovation – Plans to invest R$ 80 mm in 50 companies over the next during the next 4 years

Previ:

– Invested R$ 300 million focusing infrastructure, logistics and venture capital (high-tech)

(Contribution ranges between 11% and 20% of funds’ committed capital)

Petros:

– Fixed income (62,4%), stocks (31,1%), PE/VC (3,6%) and real state (2,9%)

– 10 PE funds, five of them in infrastructure and the rest in other traditional industries

– 7 VC funds focusing innovation

Total: R$1.2 billions (R$900 millions in infrastructure) – 3.6% of Petros’ net worth

Funcef:

– Stock (27%), /real state (7%),

– PE investor since 2004 – R$946 millions in 9 PE funds (21% of fund’s committed capital) and R$130 millions in six VC funds. – 4% of Funcef’s net worth

Previ (Banco do Brasil), Petros (Petrobras), Funcef (Caixa Economica Federal) and BNDES invested R$3.5 billion in private equity. This represents only 2% of the R$180 billion net worth of these funds.

They are allowed to invest up to 20% of their assets under management.

21

Local Institutional Investing in Brazil (cont.)

Finep (agency from Science and Technology Ministry) :

– Intention to invest R$ 1 billion in VC in the next 10 years.

• 500 companies in the portfolio

– This is 10 times the realized investments until now.

• 11 VC funds, summing up to 30 companies in the portfolio.

– Programa Inovar:

• Incubation of VC and PE funds – with SEBRAE, BOVESPA IDB and pension funds partnership

• Venture Forum: Helps entrepreneurs with business plan. 31 companies received R$160 millions

• Inovar Sementes (FINEP is the only investor)>

Companies till R$2,4 millions sales

Average fund size: R$14,4 million

22

Bios:

Christopher Meyn: Joined Gávea Investimentos in January 2006. Chris is the Partner responsible for the day-to-day management of Gavea's Illiquid Strategies. From 2003 through 2005, he served as a consultant to alternative investment managers, where he advised on illiquid investments, international business development and strategic relationships. From 1997 through 2002, Christopher served as Managing Director and Investment Committee member for Latinvest Asset Management and its US-based parent, Globalvest Management Company, one of the largest independent US-based asset managers with a focus on value investing in Latin American equities. At Globalvest, Christopher was responsible for the firms’private equity and venture capital initiatives in Latin America. Previously, Christopher worked as a VP for Dick Clark International Cable Ventures (1995-97) specializing in acquisition and development of telecom licenses in Latin America, as the VP-Finance for The Marks Group, Inc. (1993-95) a US-based telecommunications holding company, and as an investment banker in mergers & acquisitions for Dean Witter Reynolds, Inc. (1990-93). Christopher holds a B.A. in Economics with Honors from Stanford University.

Piero P. Minardi: Joined Gávea Investimentos in July 2006 becoming a Partner in December 2006 and is dedicated to the Illiquid Strategies Group. Piero has extensive private market experience in Brazil, having held senior positions in management consulting, corporate finance, strategic mergers & acquisitions and private equity. Before joining Gávea, Piero was a Principal with Darby Overseas Investments (2001-2006) with primary private equity investment responsibility for Brazil and South America. Prior to Darby, he held Principal positions with Baring Private Equity Partners and AIG Capital Partners (1999-01) and served as Director of M&A at Grupo Bunge, covering Brazil, Argentina, Venezuela and the US (1996-99). Piero has also served as an Investment Banker at Banco Pactual (1995-96) and as a Senior Associate with McKinsey & Co. (1990-93). He started his career with Andersen Consulting (now Accenture) in São Paulo (1984-89). Piero holds a B.S. in Mining Engineering from the Polytechnical School of the University of São Paulo (Poli-USP) and an MBA from INSEAD (France).