Insight Latin America - KPMG - April 2009

Brazil Still moving forward

Mexico Catching the U.S. cold?

Colombia From failed state to success story

Argentina Hidden potential

2009 Private Equity research Short-term realism, long-term optimism

Insight: Latin America A guide to the future of Private Equity for investment professionals

welcome 03

www.kpmg.com/privateequity

04 Research KPMG’s Jean-Pierre Trouillot explains why Private Equity in Latin America may continue to thrive within the region’s successful economies

6 Interview KPMG’s Rustom Kharegat and Carlyle’s Joaquín Avila discuss Latin American Private Equity

8 Mexico Strong and stable despite the economic crunch

10 Brazil Remains a popular destination for Private Equity investors

12 Colombia An eager government and favourable regulations

13 Argentina A gloomy forecast possibly belies hidden potential

14 KPMG Services At every stage of the investment cycle, KPMG firms’ advisors have a role to play

Contents

emerging potential

Victor esquivel Partner, KPMG in [email protected]

Private equity investors in latin America have traditionally needed strong stomachs, deep pockets and plenty of patience. During the 1990s a combination of punitive tax

regimes and unstable governments produced unpredictable and often poor returns. During the recent boom in emerging markets, Private equity investment in latin America was often overlooked in favor of china, central and eastern europe, Russia, and India.

But in the current uncertain economic conditions, latin America is now becoming an attractive destination for investment. latin America’s investment opportunities match the strategy we are likely to see in 2009 and 2010 from many Private equity houses, as the region offers large numbers of mid-sized businesses that are stable, well-managed, and eager for growth capital investment.

Yet latin America is not a homogenous region. while countries such as Brazil have established structural reforms, Private equity-friendly tax policies and stable economic systems, others – such as Argentina - pursue short-term economic policies that make investing more difficult. To better understand latin American Private equity local knowledge and professional advice are now more important than ever.


“The current levels of economic growth in many latin American countries are higher than in North America or europe, which means opportunities for Private equity investment”

Rustom Kharegat, Global Head of Private Equity, KPMG in the UK

Latin America’s Private Equity market has certainly been affected by the global economic crisis, but investors believe that the effects are containable within the region’s successful economies, says Jean-Pierre Trouillot

Crisis contained

04 ReseaRch | latin ameriCa 05

www.kpmg.com/privateequity www.kpmg.com/privateequity

W hen Latin America’s Private Equity investors gathered in Miami in

February 2009 for the Economist Intelligence Unit’s (EIU) 11th Annual Conference on Latin American Private Equity, the mood was understandably less optimistic than in previous years. But while some developing economies are noticing a general retreat by Private Equity investors, KPMG in the U.S.A.’s poll of Conference attendees shows that Latin America’s investors have retained their confidence.

We surveyed 110 Private Equity stakeholders on 11 February 2009, and while they were despondent about the global economy (only 8 percent expected an economic revival before 2010 and 42 percent didn’t expect it before 2011) their confidence in Latin America as an investment destination had not been affected by the same

degree of pessimism.Our results show that of the

stakeholders, only 30 percent consider Latin America to be less attractive as a destination for Private Equity investment during the current economic crisis, while 45 percent consider it more attractive. (See diagram 1.) These positive figures may well be due to the length of experience that many of the region’s investors now have. Those who have been active in the market since the 1990s have previously endured boom and bust. Now, standards of transparency and due diligence are much higher than before, and so is confidence in the underlying strength of the economies that are being invested in. Encouragingly, 58 percent of our respondents expect higher international investment in Latin America between 2010 and 2012, although 29 percent expect investment to decline and 12 percent

expect global investment in Latin America to stay the same.

However, there are certainly two stories to tell about Latin America as an investment destination. Our research echoes the feeling at the Conference that there is a growing disparity between countries that are regarded as positive destinations and those that are not. (See diagram 2.)

Popular investment destinations Mexico and Brazil remain the top two targets, with the majority of respondents planning to focus their investments here within the next two years. Colombia has risen in popularity due to its pro-investment government and the many investment opportunities that exist within the country, while the economic policies and performance of Argentina are presently discouraging investors, with a drop from 11 percent in actual investments in 2008 to 7 percent in planned

investments over the next two years.Colombia, now the third most

popular investment destination in Latin America, offers a dramatic success story. Luis Guillermo Plata, Colombia’s Minister of Trade, Industry and Tourism, admitted at the Conference that, only a few years ago, Colombia had, “been on the verge of becoming a failed state”.

In the short term, the Latin American deal market for Private Equity in 2009 will not be strong, according to stakeholders. (See diagram 3.) One in three sees a recovery in the deal market in 2009, but 65 percent are not expecting a pickup until at least 2010.

Another result showed that for 86 percent of respondents, fundraising was down; not unexpected, but a sign that even though Latin America is sheltered from the worst impact of the global economic crisis, many of its potential investors are not.

If entries to the market are impacted, then so too are the exits. (See diagram 4.)

The exuberance seen in Private Equity investment in the region in the 1990s has been replaced by a large degree of pragmatism, and with the public markets closed and strategic investors in short supply, 21 percent of respondents will not be able to execute their planned exit strategy in 2009. An equal number of respondents have concerns about debt compliance or bankruptcy, although 30 percent of investors are refocusing in the short term on organic growth and/or cost reduction opportunities. Another 14 percent will consider add-on acquisition opportunities that were unavailable before the crisis.

Our research in 2009 shows that while stakeholders are cautious, they also see the opportunities in the region’s best-performing countries.

4 exits implemented in 20082 On which latin american countries do you plan to focus your investments within the next two years?1 Has latin america become more attractive to

Private equity investors during the economic crisis? 3 When do you expect to see a recovery in the deal market for Private equity in latin america?

7%First half of 2009

21%Second half of 2010

16%2011 or later

28%Second half of 2009

28%First half of 2010

11%Unsure

45%More

14%No difference

30%Less

“KPMG in the U.s.a.’s poll of conference attendees shows that Latin america’s investors have retained their confidence”

n=73

None

Foreign strategic investor

Local sale

Local IPO

Sale to another Private Equity fund

US IPO

0 20 40 60 80 100

40%

34%

26%

9%

8%

0%

%

0 20 40 60 80 100%

Mexico

Brazil

Colombia

Peru

Chile

Argentina

Other

45%

44%

30%

24%

17%

7%

11%

Jean-Pierre trouillot Partner, Private Equity KPMG in the [email protected]

% %

Sources: KPMG in U.S.A. survey 2009

Latin America’s disappointing returns in the 1990s are no guide to Private Equity investment in the region in 2009, say Joaquín Avila of Carlyle Partners and KPMG’s Rustom Kharegat

A new era

06 In dIscussIon


Why do you think Latin America is so appealing to Private Equity investors at the moment?JA For three reasons, I think. Firstly, prices are decreasing significantly at the moment due to the economic turmoil we are experiencing. Secondly, the banking sector is in very good shape, and there is a real possibility of bank funding in the very near future, even though it’s not possible at the moment. Finally, there are many sectors in Latin America that are either experiencing natural growth, or are very fragmented. RK Latin America’s profile has risen dramatically during the downturn – not least because a number of established players in global Private Equity have had considerable success there. Latin American Private Equity deals are now within range of some North American funds that are being redirected.

If recent history is any guide, many investors will perhaps be wary of investing in Latin American deals. Is this justified?JA For many people this may have been true in the 1990s. More recently, however, some investors have received excellent returns on their money.RK That’s right. Any discouraging past performance was due to the economic policies of the time. One of the most encouraging progressions of the last five years has been the

growth of more responsible, less politically-motivated financial management within some Latin American economies.

Which sectors do you see thriving in the current economic climate?JA There is definitely potential for consolidation within healthcare in Mexico, with only 100 hospitals with more than 50 beds in the country. Many other Latin American industries with strong growth potential due to domestic demand are just as fragmented. Sales are another growing sector as there is much more potential to attract sales representatives during the downturn. Servicing the base of the pyramid is another segment that offers interesting potential. In Mexico we have a catalogue company selling door-to-door, which has grown by more than 10 percent per year in real terms. A driver of this business is the capacity to attract customers that will buy and re-sell our products. The impact of the downturn depends on which sector you choose to invest in.RK Many Latin American countries are relatively resource-rich and well positioned as exporters, while other parts of the world are looking to achieve things like food security. Many countries also need to upgrade infrastructure. The current levels of economic growth in many Latin American countries are higher than in North America or Europe, which

07


workforce, while Colombia and Peru are rich in resources. But Mexico has suffered during the downturn; for a long time it has been dependent on outsourced American manufacturing, and that market has been very much affected by the recession. Argentina’s macro economy also remains weak, while many of its businesses remain hungry for investment.

can foreign Private Equity houses still do business in Latin America, and if so where should they be looking?JA Doing Private Equity deals from behind a desk in another part of the world and relying on law firms to do due diligence is a recipe for disaster. When looking to do business in Latin America localizing your concepts is vital. It’s very different to investing in the U.S., for instance. When there’s a huge deal in the U.S., every house will look at it, and that’s rarely the case in Latin America. The average transaction is US$40 or US$50 million, and that’s not exciting for the big firms of the world. RK Look at the volume of Private Equity investment in Latin America. Though investment has certainly risen, the region remains largely under-invested when you compare it to other emerging economies. I therefore believe there is considerable scope for deeper and wider Private Equity investment in Latin America.

means opportunities for Private Equity investment as wealth rises among the population and domestic demand increases.

What are the potential risks for investors in the region?RK Latin America has done a lot of business with economies that want its commodities, such as oil or steel, but recently both demand and pricing have diminished, which will certainly affect businesses such as these.JA Going into minority situations in some countries with a lot of state interference might also be tough. It’s not impossible, but it depends on who your real counterparty is. Another mistake would be in relying too much on the public markets as an exit. At this time, you need to focus on creating value. Change the strategy of your investments, support the management and find new markets for it, but don’t look for an IPO in Latin America.

What regional differences do you see within Latin America during the current economic climate?JA Countries like Peru and Colombia are popular at the moment because their economies are working relatively well, and their economic situation is very stable.RK You can’t ignore the fact that Brazil and Mexico dominate investment in the region. Also, Chile, for example, has a widely admired

Joaquín Avila – Managing Director, Carlyle, Mexico [email protected]

Joaquín Avila is a Managing Director for Carlyle, focused on buyout investment opportunities. He is based in Mexico City. Prior to joining Carlyle, Mr. Avila was a Managing Director and Head of Latin America for Lehman Brothers, and has more than 20 years investment experience in the region.

Rustom Kharegat – Global Head of Private Equity, KPMG in the [email protected]

Rustom Kharegat leads KPMG’s Global Private Equity and Sovereign Wealth Fund Practices. Rustom is global lead partner for KPMG firms’ clients such as CVC, Permira and Cinven and has led some of the largest and most complex worldwide transactions for several financial buyers in a number of industries.

“Many Latin American countries are relatively resource-rich and well positioned as exporters”

“There are many sectors in Latin America that are either experiencing natural growth, or are very fragmented”

Mexico’s sound macroeconomics and favorable demographics offer a firm platform for investment

Strength and stability

OverviewKPMG in Mexico estimates that the country captures between 10 and 15 percent of Latin America’s Private Equity investment; less than US$1 of every US$20 of Mexico’s foreign direct investment (FDI) is a Private Equity investment. This, however, rather undervalues Mexico’s potential.

Three structural problems presently constrict Mexico’s Private Equity market: Firstly, Private Equity investment tends to come from offshore funds. Mexico’s US$80 billion pension funds cannot be invested in Private Equity as an asset class yet. And a collapse in foreign fundraising may have a greater impact on Mexico than on other areas. Secondly, the majority of Mexico’s banks are foreign-owned. Access to debt will be severely restricted in the

foreseeable future, and so deals will tend to be smaller growth capital investments. Thirdly, even in a benign environment, there is little chance of an IPO exit for growth companies in Mexico. Exits are almost exclusively made through strategic sales.

On the other hand, Mexico has huge potential. Unemployment is the lowest in any country within the OECD, with an emerging middle class demanding products such as investment-ready financial services. Gross domestic product (GDP) has arguably been restricted by a lack of investment in medium-sized businesses, and there is no shortage of investment targets in the US$20 million - US$50 million range. If U.S. funds need to spread their investments, they will find opportunities on their southern border.

A s the only Latin American country that is part of the North American Free Trade Agreement and the Organisation for Economic Co-operation and

Development (OECD), Mexico is the Latin American country most affected by the economic crisis in the U.S.A. GDP growth rates have been above 4 percent since 2005, but the International Monetary Fund (IMF) estimate these rates are likely to dip to around 0.3 percent in 2009 and 2.1 in 2010.And yet Mexico still offers strong and stable macroeconomic

fundamentals, a growing middle-class and a scarcity of financing for small and middle-sized companies (SMCs), which provide significant opportunities for Private Equity investment. The previous two administrations have been Private Equity supporters, and the regulatory reforms they introduced are beginning to be felt.Investors in the country can expect to find a friendly foreign

investment regime with improved standards of corporate governance and increased protection for minority shareholder rights. Mexico’s stronger entrepreneurial activity generally resides in the northern part of the country, with an improvement in support programs for new business start-ups sponsored by the government. Much of the growth and investment prospects for SMCs have been funded with internal resources or through private investors.

Victor Esquivel – Partner, KPMG in [email protected]

08 focus on | mExicO 09

Trends in planned investment in mexico over five years

market analysis


Points of view...

“ mexico’s move to a flat tax rate aims to simplify the system, and to broaden the tax base”

Jose Leiman, Director, International Corporate Tax Services, KPMG in the U.S.A.

Regulatory issues

n The 2005 Securities Market Law introduced protection for minority shareholders, including limits on restricted stock.

n A legal framework – the Sociedades Anominas Promotoras de Inversion (SAPI) – provides an investment vehicle with regulation on traditional Private Equity mechanisms (drag-along, tag-along rights, etc), creating a balance between oversight and cost for smaller, fast-growing companies.

n Investment regime restrictions on institutional investors limit participation by local pension funds and insurers in this asset class.

Tax implications

n Dividend payments are not subject to any withholding tax. Capital gains tax is payable according to specific rules for foreign residents and tax treaty benefits may apply.

n The flat corporate tax regime, in effect since 2008, sets tax rates at 17 percent in 2009 and 17.5 percent in 2010. Companies are required to pay the higher of the corporate income tax (currently at 28 percent) or the flat corporate tax.

“Investors in the country can expect to find a friendly foreign investment regime with improved standards of corporate governance”

Planned investment in mexico 2009-10 and actual investment in mexico in 2008 “ There is definitely potential

for consolidation within healthcare in mexico”

Joaquín Avila, Managing Director, Carlyle, Mexico City

2009

2008

2007

2006

2005

0 20 40 60 80 100

45%

%

53%

45%

34%

36%

%

2009 to 2010

2008

0 20 40 60 80 100

45%

46%

Source: KPMG in the U.S.A. survey 2009

Source: KPMG in the U.S.A. survey 2009

Brazil’s investment-friendly government helps to make it one of the most attractive regions for Private Equity in Latin America

Golden opportunity

Overview

Until 2008, Brazilian fundraising and investing boomed. ABVCAP, the Brazilian Private Equity association, calculates that US$26 billion had been raised in funds up to June 2008, with US$11 billion still to be invested. One of the reasons for this is that Brazil, alone among Latin American countries, has offered a flow of IPO exits. ABVCAP’s figures show 60 percent of investment exits were

B razil’s minor economic miracle has produced years of growth, an emerging middle class, a healthy Private Equity community, an entrepreneurial business

environment, a democratic regime, economic stability and a clear legal framework that encourages investment.Undoubtedly the country has been hit hard by the global

economic crisis: production has fallen 14.5 percent year-on-year, according to the Brazilian Institute of Geography and Statistics. Yet Brazil seems to be insulated from the very worst of the crisis. It is by far Latin America’s largest economy, with strong fiscal controls, low inflation, and steady GDP growth. Brazil’s banking sector does not depend on the U.S.A. and its economy does not rely on a single major trading partner. The impact of the downturn on Brazil has not been the same as that noted in other countries, and according to the IMF, the World Bank and the OECD, the country will continue to weather the downturn. The government is business-friendly, installing tax and

governance policies that aim to entice Private Equity investment, such as conditional relief for foreign investors from capital gains, income tax and double taxation.

José Carlos Simões – Partner KPMG in Brazil, Transaction and Forensic Service, National Head of Private Equity – [email protected]

10 focus on | Brazil 11

Market analysis


Points of view...

“Brazil’s financial system is well regulated and major banks have low risk exposure. Private Equity deal flow remains strong”

José Carlos Simões, Partner KPMG in Brazil

regulatory issues

n In 2000, the New Market was established at the BM&F Bovespa, the São Paulo-based stock exchange. Growing businesses may exit out of the Bovespa as a closed company.

n Although Brazil’s judicial system is inefficient at resolving commercial disputes, the 1996 law of arbitration has been successful at keeping disputes out of court.

n Listed companies must use GAAP, and regulations requiring both public and private companies must use Brazilian GAAP.

Tax implications

n Foreign investors pay no capital gains tax and foreign investors negotiating at the BM&F Bovespa pay no income tax, subject to conditions.

n Depending on the country of residence, foreign investors may be able to avoid double taxation.

n Open pension funds can invest up to 50 percent of reserves in stocks, and insurance companies up to 49 percent. Pension funds can invest 20 percent of reserves in local Private Equity funds.

via the BM&F Bovespa, where they outperformed other issues by a factor of 2.5.

Now the IPO exit route is closed, exits will be more difficult to find in the short term, although there are many regional Brazilian firms looking to consolidate. Last year, based on public information, KPMG in Brazil observed 663 M&A transactions in the country, only 39 (5.9 percent) involving Private Equity.

Most of Brazil’s investments have been done with little or no leverage. Despite the strength of Brazil’s banking sector, the use of local or external finance and debt is not often part of the strategy. The absence of such financing does not affect the strategies of many Private Equity investors. By starving growing businesses of working or development capital, the credit crunch may propel some Brazilian

companies into the arms of waiting local Private Equity firms.

Between 2001 and 2005 the average deal size was around US$20 million, growing between 2006 and 2007 to around US$80 million. In 2008, one deal was done at around US$300 million, but growth capital investments will probably return to pre-2008 figures. Most successful Private Equity investors have a strong local presence.

Brazil’s diversified export marketThe measure of imports and exports is still less than 25 percent of GDP. Brazil’s markets are mostly internal, and unlike Mexico it does not rely overwhelmingly on trade with the u.s.A.

Latin America and caribbean: 26%

Export partners, % of total

Source: Secretaria de Comércio Exterior (SECEX) do Ministério do Desenvolvimento, Indústria e Comércio Exterior (MDIC)

%other: 18%

Middle East: 4%

Africa: 5%

china: 9%

u.s.A.: 14%

European union: 24%

in 2008 the following individual Private Equity investments were made in a range of sectors (total 12):

Source: KPMG in Brazil PE Practice Research

financial and insurance services 6

Real estate 3 chemical & petrochemical Hotels & restaurantsRetail & shopping centresTransport & railwayservices

oil & gas 2 food & drink IT Mining Transport sugar and ethanol

Telecommunications & media 1 Wood & paper Vehicle assembly Hospital & clinical analysis labs

12 focus on | Colombia 13


Regulatory issues

nPensionfundscaninvest10percentoftheirassetsinPrivateEquity.

nInvestorsincertainindustriescanestablishthemselvesassingle-companyfreetradezones.

nThelegalstabilitypactallowsinvestorstosignacontractwiththegovernment,whichguaranteesthefinancialregulationsinoperationtodaywillpersistforthenext20years.Ifconditionsimprove,businessesmaychoosetooperateunderthenewregime.

focus on | aRgentina

market analysis

FormerPrivateEquityhotspotArgentinastillholdsopportunitiesdespitecautiousinvestmentforecasts

Weathering the storm

overviewmariano Sanchez–Partner,TransactionServicesKPMGinArgentina [email protected]

ThedominantstoryinArgentinaistheweaknessofitsmacroeconomy;manypublicequityinvestorspulledoutofArgentinaaftertherecessionof2001andthecountry’srecentfive-year-longeconomicboomiswellandtrulyoveraccordingtotheACBR.

Yetopportunitiespersist.Manymid-sizedbusinessesarestillfamily-

ownedandstarvedofinvestment.Therearealsomanyeducated,entrepreneurialbusinesspeoplewhoarekeentoexpand.ThesuccessofDolphinManagementFundinbuyingmanystrategicenergycompaniessince2003showsthatinfrastructureinvestmentsremain,eventhoughtheyarenotcurrentlyprofitable.

market analysis

overviewCamilo gonzalez–Director,[email protected]

Despitethetimingoftheglobalcreditcrunch,Colombia’sambitiousandinnovativegovernmenthasneverthelessputinplacethestructuralreformsthatinvestorsneed.This

hasbeenrewardedwithrenewedinterestfromPrivateEquityinvestors;our2009surveyshowsColombiaasthirdonlytoBrazilandMexicoasapotentialdestinationforinvestment.Foracountrywhereitwasoncehazardousforasuccessful

businessmantowalkdownthestreet,thisrenewedconfidencehasbeenadramaticchange,andfortheentrepreneursandcitizensofColombia,starvedofinvestmentsincethe1980s,itislongoverdue.Colombiaisacountrywithinvestmentopportunitieseverywhereyoulook:frommedicinetoinfrastructure,fromtourismtofinancialservices.Providedthepoliticalenvironmentremainsstable,itmaybeoneofthemajorbeneficiariesofthisgenerationofPrivateEquityinvestments.

Colombia’senterprisinggovernmentseeksinvestors

ambition and innovation

WiththeLAVCAshowingthatin2008Colombia’sPrivateEquityinvestmentwasjust0.04percentofGDP,existinginvestmentishardtospot.Yetwithgrowthof7.7percentin2007and4.0percentin2008,Colombia’seconomyisresistingthedownturnandisbecomingatargetforPrivateEquity.Sevenlocalfundsareoperating,and

12moreareraisingcapital.Potentialmarketsincludemedicaltourism(withhospitalsofferinglower-costsurgerytargeting45millionuninsuredAmericans).ColombiaisalsoLatinAmerica’ssecond-largestproducerofbiofuelsafterBrazil,andisfastemergingasadestinationforbusinessprocessoutsourcing.

DespiteitshistoryofPrivateEquityinvestment,Argentinaisprobablynotaprioritydestinationforinvestorsinthenear-term;KPMG’ssurveyofstakeholdersshowedthat11

percentfocussedtheirinvestmentsinArgentinain2008,butonly7percentstillconsidereditafocusin2009and2010.Argentinahasplentyofopportunity:awell-developedeconomy

andmanywell-managedtargetbusinesses.However,italsohasapopulistpresidentwhooversawtheshocknationalizationofArgentina’spensionfundsattheendof2008,whichpreventedthecountrydefaultingonitsinternationaldebt.AccordingtotheArgentinaCommercialBankingReportQ12009

(ACBR),thecountry’seconomicgrowthwillfallto0.6percentin2009from6.8percentin2008,makingArgentinaariskydestination,notleastbecausethoseexitspreviouslyavailablethroughstrategicbuyersorIPOsarenolongerpossible.

Regulatory issues

nArgentinagenerallyhasverygoodstandardsofaccountingandtransparency.

nInOctober2008thePresidentsignedabilltonationalizethecountry’s10private-pensionfunds,makinginvestmentinthissectormoreproblematic.

nWhilelawsprovideshareholderprotection,somelocalmanagerscanbehostiletowhattheyseeasoutsideinterference.

Household consumption (millions pesos)

Argentina’s household consumption has increased dramatically since the recession of 2001-2002

2008

2007

2006

2005

2004

2003

2002

2001

0 100k 200k 300k 400k 500k

475,876

386,305

326,276

281,189

237,567

193,482

185,164

197,044

fDI has been growing every year since 2003, reaching almost us$10 billion for 2008

Foreign direct investment

2008

2007

2006

2005

2004

2003

2002

2001

2000

0 2 4 6 8 10 12US$Billion

FDIwasUS$8.9billionuptoQ3andreachedUS$10billionfor2008inQ4

Source:NationalStatisticsDepartment Source:IMF

Realization

6

Exit grooming

5

Fundraising

1

Deal origination

2

Evaluation and Investment

3

Plan delivery

4

Private Equity Lifecycle

1 FundraisingHow do your funds benchmark against others, and is your exposure to tax mitigated? KPMG firms’ experience and knowledge of tax, regulatory and compliance issues helps your fund managers perform to their maximum efficiency.

2 DealoriginationHow will the business grow? What is the investment case? Does it fit your investment criteria? One of the keys to successful investing is identifying and working up appropriate opportunities in your market. Our in-country teams can help make the case for investment.

3 EvaluationandinvestmentOur firms’ local knowledge helps uncover the potential value in the deal by assessing the dynamics and drivers in the market, predicting the key challenges, and compiling robust due diligence and tax reports.

4 PlandeliveryWhat are the options for performance improvement? How do you finance your target investments? Strategic advice can dramatically improve the speed and effectiveness of such initiatives.

5 ExitgroomingBefore exit the financials need to be in order, which is an important differentiator of value and a key to attracting exit partners. Exit options need to be evaluated, and done deals need to be benchmarked in order to be certain you have achieved full value.

6 RealizationHave your tax liabilities been minimized, and has the auction been run effectively?

15


14 kPmg sErvicEs

“kPmg member firms aim to provide Private Equity clients with an integrated, tailored service of the highest standard executed through a single point of contact who can direct our teams to support you from anywhere in the world”

Timothy P. Flynn, Chairman, KPMG International

“Our Private Equity teams are structured to be responsive and mobile”

Rustom Kharegat, Global Head of Private Equity, KPMG in the UK

kPmg has member firms in countries across Latin America, including Brazil, Argentina, mexico, colombia, Peru and chile. Underlying our approach is our methodology – no matter where our clients are active, kPmg firms are committed to providing a high standard

of work with an innovative approach. regardless of where we are based we act as one team, adapting to the needs of clients and working together to provide them with the answers they need to make the best decisions on their deals and investments.

Our global methodology

Heads of Private Equity: Latin America

MexicoVictor EsquivelPartner, KPMG in MexicoTel: +52 55 5246 8300Email: [email protected]

BrazilJosé Carlos SimõesPartner KPMG in Brazil, Transaction and Forensic Service, National Head of Private EquityTel: +55 11 3245 8383Email: [email protected]

Private Equity is not just a local business. KPMG member firms have teams of experienced advisors across the globe.

GlobalRustom Kharegat Global Head of Private Equity, KPMG in the UKTel: +44 20 7311 8847Email: [email protected]

EMAJohn EvansHead of Private Equity EMA Region, KPMG in GermanyTel: +49 211 475 7569Email: [email protected]

Heads of Private Equity by Country

Global Heads of Private Equity by Region

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Corporate fiance services, including Financing, Debt Advisory and Valuation Services, are not performed by all KPMG member firms and are not offered by member firms in certain jurisdictions due to legal or regulatory constraints.

ColombiaCamilo GonzalezDirector, Advisory Services, KPMG in ColombiaTel: +57 1 618 8000Email: [email protected]

ArgentinaMariano SanchezPartner, Transaction Services, KPMG in ArgentinaTel: +54 11 4316 5980Email: [email protected]

AmericasShawn Hessing Head of Private Equity, Americas RegionKPMG in the U.S.A. Tel: +1 817 339 1216Email: [email protected]

Asia PacificHonson ToPartner, Head of Private Equity Asia Pacific Region,KPMG in ChinaTel: +86 21 2212 2708Email: [email protected]

© 2009 KPMG International. KPMG International is a Swiss cooperative. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.

Designed by Engage PublishingName: Insight: Latin America Publication number: 903012Publication date: April 2009


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Insight Latin America - KPMG - April 2009