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BNDESBNDES
BNDESBNDES
Sixth MeetingLatin American Governance Roundtable
BNDES Iniciatives to Promote Better Corporate Governance
Eduardo Rath Fingerl
Lima 09.21.2005
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BNDESBNDES
BNDES Annual DisbursementsBNDES Annual DisbursementsUS$ million
10,707
186
12,542
270
11,187
534
13,686
62
9,716
26
2001 2002 2003 2004 jul-05Financings and Shareholdings Secondary market Transactions
9,74310,892
12,81311,721
13,748
Converted to dollar on the disbursements date
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BNDESBNDES
BNDES Disbursements for Export FinanceBNDES Disbursements for Export Finance
US$ millionUS$ million
2,602
3,946 4,0063,861
2,758
2001 2002 2003 2004 jul-05
Converted to dollar on the disbursements date
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BNDESBNDES
BNDES Disbursements toBNDES Disbursements toMicro and Small Companies and to IndividualsMicro and Small Companies and to Individuals
1,7942,021
2,470
3,291
1,967
2001 2002 2003 2004 jul-05
US$ million
Converted to dollar on the disbursements date
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BNDESBNDES
1,967
8936,856
Micro and Small
Medium
Large
BNDES Disbursements by Firm SizeBNDES Disbursements by Firm Size
Year 2005 (July) Year 2005 (July)
71,652
5,081 6,088
Micro and Small
Medium
Large
Number of Transactions US$ Million
Remark: Excludes secondary markettransactionsConverted to dollar on the disbursements date
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BNDESBNDES
4753
59
4146
54
45
55
45
55
2001 2002 2003 2004 jul-05
Direct operation Indirect operation
BNDES DisbursementsBNDES DisbursementsAccording to Types of TransactionAccording to Types of Transaction
(percentage)
Converted to dollar on the disbursements date
Remark: Excludes secondary markettransactions
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BNDESBNDESBNDES Disbursements BNDES Disbursements by Sectors of Activityby Sectors of Activity
(percentage)(percentage)
52%
7%
11%
30%
46%
7%
12%
35%
48%
8%
14%
30%
40%
5%
17%
38%
48%
5%
11%
36%
2001 2002 2003 2004 jul-05
Industry Retail and Services Farming Infrastructure
Converted to dollar on the disbursements date
Remark: Excludes secondary markettransactions
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BNDESBNDES
BNDESPARBNDESPARMain IndicatorsMain Indicators of Totalof Total PortfolioPortfolio
. SHARES / FUNDS / RIGHTS....................................................
. DEBENTURES...........................................................................
Book Value (R$ billion) 20,1
14,6
5,5
. SHARES / FUNDS / RIGHTS........................................................
. DEBENTURES – Outstanding balance
..................................................
Market Value (R$ billion) 36,9
30,2
6,7
19,5
15,4
4,1
39,8
34,6
5,2
20,2
15,0
5,2
41,6
35,3
6,3
Jun/05Dec/03 Dec/04Number (units)
. FUNDS......................................................................................
. COMPANIES.........................................................................
19
186
18
186
15
162
66% of66% of portfolioportfolio volume in Dec/04volume in Dec/04 was represented by high liquidity assetswas represented by high liquidity assets..
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BNDESBNDES
R$ million
Mkt. Value
Petroleum and Gas
Mining
Electric power generation
Telecommunications
Electric power distribution
Steel industry
Pulp and paper
Commercial banks
Aviation
Chemical and petrochemical
Others
TOTAL
9,863
6,779
6,337
3,536
2,912
2,225
2,095
1,808
940
807
2,506
39,808
BNDESPARBNDESPARTotalTotal Portfolio Portfolio -- Industry DistributionIndustry Distribution
(Shares, Debentures, Funds and Bonus)
PowerGeneration
15.9%
Steel5.6%
Telecom.8.9%
Mining17%Petroleum
24.8%
Others6.3%
Pulp andPaper5.3%
PowerDistribution
7.3%Aviation
2.4%
Banks4.5%
Chem.andPetroch.
2.0%
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BNDESBNDES
AMCSuperintendent AMC
Advisors
InvestmentDept.
DEINV
PortfolioMonitoring and
Mgmt. Dept.
DEPAC
SMEs Innovationand Invest.Funds Dept.
DEIN
CapitalMarkets
Dept.
DEMEC
LegalDept.
DEJUMC
BNDES CapitalBNDES Capital Market Area StructureMarket Area Structure
CapitalCapital Markets Markets CommitteeCommittee
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BNDESBNDES
The PIBB Fund and BNDES’s GoalsThe PIBB Fund and BNDES’s Goals
BNDESBNDES’’s Goalss Goals
Sell part of its equity portfolio through an efficient structureSell part of its equity portfolio through an efficient structure
Develop Brazilian capital marketsDevelop Brazilian capital markets
Facilitate access of the small investor to the stock marketFacilitate access of the small investor to the stock market
Reduce intermediation costsReduce intermediation costs
What is PIBBWhat is PIBB
PIBB Fundo de PIBB Fundo de ÍÍndice Brasil 50 ndice Brasil 50 –– Brasil Tracker is the first and only Brasil Tracker is the first and only investment fund of market indexes negotiated in the stock marketinvestment fund of market indexes negotiated in the stock market in in South America.South America.
Reproduces the valuation of IBrXReproduces the valuation of IBrX--50 Index, formed by the 50 most 50 Index, formed by the 50 most negotiated shares at BOVESPA.negotiated shares at BOVESPA.
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BNDESBNDES
PIBB’s first offerPIBB’s first offer
Composed of shares owned by BNDESComposed of shares owned by BNDES Participações [BNDESPAR]Participações [BNDESPAR]
and the Social Participation Fundand the Social Participation Fund [FPS].[FPS].
Over 25,000Over 25,000 individuals participatedindividuals participated inin the offerthe offer
52% of52% of the offer allocatedthe offer allocated toto retail investorsretail investors
Amount collectedAmount collected : R$ 600: R$ 600 millionmillion
1%1% discount on discount on IBrXIBrX--50 on 07/22/200450 on 07/22/2004
Increase in value ofIncrease in value of 53%53% since the offersince the offer
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BNDESBNDES
BNDESPARBNDESPAR andand FPS areFPS are the sellersthe sellers
OfferOffer toto be made exclusivelybe made exclusively inin BrazilBrazil
Estimated sizeEstimated size: R$ 1.0: R$ 1.0 billion billion
RetailRetail:: Maximum Maximum of R$ 800of R$ 800 millionmillion
Institutional: Minimum of R$ 400 millionInstitutional: Minimum of R$ 400 million
PricingPricing:: BookbuildingBookbuilding
PutPut OptionOption:: GuaranteeGuarantee of BNDESof BNDES repurchaserepurchase forfor the retail investorthe retail investor,,limitedlimited to R$ 50,000.00,to R$ 50,000.00, until theuntil the end of 2006end of 2006
source: BNDES’s home page (www.bndes.gov.br)source: BNDES’s home page (www.bndes.gov.br)
CharacteristicsCharacteristics of PIBB’sof PIBB’s second offersecond offer
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BNDESBNDES
BNDES AND THE KNOWLEDGE ERABNDES AND THE KNOWLEDGE ERA
Knowledge Economy X Industrial Society
New Approach for Evaluating and Monitoring of Projects/ Enterprises/ Economic Groups
Credit Risk: higher emphasis in the future
New factors to be observed: intangible assets
Knowledge Management
Competence Outlook
IT Tools
Integrated Actions
ChallengesChallenges for BNDES’s for BNDES’s operationsoperations
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BNDESBNDES
PRODUCTS DEMANDING CLOSE COMPLIANCE OF PRODUCTS DEMANDING CLOSE COMPLIANCE OF CORPORATE GOVERNANCE RULES CORPORATE GOVERNANCE RULES
11-- Acceleration of Credit ProgramAcceleration of Credit Program ((Credit LimitsCredit Limits))
22-- Private Equity FundsPrivate Equity Funds (2)(2)
33-- VentureVenture CapitalCapital FundsFunds (7)(7)
44-- Seed Money FundsSeed Money Funds ((currently being finalized)currently being finalized)
55-- Increase in use of ProjectIncrease in use of Project Finance Finance
66-- Support to BOVESPA inSupport to BOVESPA in identiftying targets and implementation identiftying targets and implementation ofof BOVESPA MAISBOVESPA MAIS
77-- Support to the internationalizationSupport to the internationalization ofof Brazilian companiesBrazilian companies
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BNDESBNDES
EVALUATION SYSTEM AND NEW METRICS EVALUATION SYSTEM AND NEW METRICS FOCUS ON INTANGIBLE ASSETS
GovernanceGovernance
InnovationInnovation
Research and DevelopmentResearch and Development
Social and Environmental AccountabilitySocial and Environmental Accountability
Job CreationJob Creation
PartnershipsPartnerships ((technologicaltechnological,, commercialcommercial,, integration integration with Instituteswith Institutes ofof Research and UniversitiesResearch and Universities))
Aggregated ValueAggregated Value
Exporting vocationExporting vocation
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BNDESBNDES
PRINCIPAL GOVERNANCE STANDARDS REQUIRED PRINCIPAL GOVERNANCE STANDARDS REQUIRED FROM INVESTMENT TARGETS FROM INVESTMENT TARGETS
1 1 -- Focus on the Focus on the subscriptionsubscription ofof shares with voting rightsshares with voting rights
2 2 -- Right ofRight of appointingappointing oneone membermember toto the Boardthe Board ofof DirectorsDirectors
3 3 -- TagTag along right (100% of the amount paid to controlling along right (100% of the amount paid to controlling shareholders)shareholders)
4 4 -- Commitement to pursue an IPO within a certain period of Commitement to pursue an IPO within a certain period of timetime
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BNDESBNDES
PRINCIPAL GOVERNANCE STANDARDS REQUIRED PRINCIPAL GOVERNANCE STANDARDS REQUIRED FROM INVESTMENT TARGETS (CONTINUED)FROM INVESTMENT TARGETS (CONTINUED)
5 5 -- PreviousPrevious approval requirement with respect to certain corporate approval requirement with respect to certain corporate actions, such as:actions, such as:
-- entering into a new line of businessentering into a new line of business
-- sale ofsale of substantial assetssubstantial assets,, including equity interests in including equity interests in subsidiariessubsidiaries
-- mergers, acquisitions mergers, acquisitions and joint venturesand joint ventures
-- sale of controlsale of control
--amendmentsamendments toto bylawsbylaws
--increase or decrease ofincrease or decrease of capitalcapital stockstock
--creationcreation of of new classesnew classes ofof sharesshares,, grouping or splitgrouping or split ofofsharesshares
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BNDESBNDES
PRINCIPAL GOVERNANCE STANDARDS REQUIRED PRINCIPAL GOVERNANCE STANDARDS REQUIRED FROM INVESTMENT TARGETS (CONTINUED) FROM INVESTMENT TARGETS (CONTINUED)
--issuanceissuance ofof securitiessecurities ((debenturesdebentures,, shares or shares or subscription rights)subscription rights)
--decreasedecrease inin distributiondistribution ofof dividends below dividends below minimum minimum set forth in the byset forth in the by--lawslaws
--entering into longentering into long--term agreements with third term agreements with third parties parties with amounts exceedingwith amounts exceeding 100% of100% of the the companycompany’’ss netnet worthworth, including guarantees, including guarantees and and suretiessureties;;
--determinationdetermination ofof management remuneration and management remuneration and equity equity compensationcompensation;;
--entering into entering into agreements with the purposeagreements with the purpose ofofassigning or acquiring technologyassigning or acquiring technology
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BNDESBNDES
PRINCIPAL GOVERNANCE STANDARDS REQUIRED PRINCIPAL GOVERNANCE STANDARDS REQUIRED FROM INVESTMENT TARGETS (CONTINUED) FROM INVESTMENT TARGETS (CONTINUED)
66-- ControllingControlling shareholdersshareholders areare further prevented further prevented fromfrom::
--holding equity interests in companies that holding equity interests in companies that pursue the samepursue the same business as the companybusiness as the company
--enteringentering into loan agreements with the into loan agreements with the companycompany
--grantinggranting guaranteesguarantees ofof any natureany nature,, exceptexcept totosubsidiaries or affiliatessubsidiaries or affiliates
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BNDESBNDES
PRINCIPAL GOVERNANCE STANDARDS REQUIRED PRINCIPAL GOVERNANCE STANDARDS REQUIRED FROM INVESTMENT TARGETS (CONTINUED) FROM INVESTMENT TARGETS (CONTINUED)
77--The controlling shareholders further commitThe controlling shareholders further commit to:to:
-- negotiate transactions with its affiliates and subsidiaries at negotiate transactions with its affiliates and subsidiaries at armarm’’s s length;length;
--keepkeep aa structured systemstructured system ofof management and control of management and control of information capableinformation capable ofof generating periodic reportsgenerating periodic reports, allowing the , allowing the monitoringmonitoring ofof projections,projections, financialfinancial and physical targets and physical targets established by management;established by management;
--allow the technical team indicated byallow the technical team indicated by BNDESPAR BNDESPAR freefree access toaccess toits premisesits premises, as, as wellwell asas provide informationprovide information of legal, financial,of legal, financial,administrativeadministrative, fiscal,, fiscal, technological or strategic naturetechnological or strategic nature,, so that the so that the team may develop its studies andteam may develop its studies and diagnosesdiagnoses on theon the COMPANYCOMPANY or or sectorssectors inin whichwhich itit operatesoperates;;
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BNDESBNDES
GOVERNANCEGOVERNANCE RULES FOR BENEFICIARIES OF RULES FOR BENEFICIARIES OF BNDES LOANSBNDES LOANS
1.1. Independent audit by firms registered at Independent audit by firms registered at the Brazilian Securities and Exchange the Brazilian Securities and Exchange Comission (CVM)Comission (CVM)
2.2. Governance issues are taken into account Governance issues are taken into account in the determination of the companyin the determination of the company’’s s credit ratingcredit rating
3.3. Governance issues are also taken into Governance issues are also taken into account in the determination of credit account in the determination of credit limits in the Accelaration of Credit Programlimits in the Accelaration of Credit Program
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BNDESBNDES
BNDES’s CORPORATE GOVERNANCEBNDES’s CORPORATE GOVERNANCEOrganizational ChartOrganizational Chart
Administrative Council Internal AuditingInternal Auditing
Planning Planning Control Control LegalLegal
AdministrationAdministration
FinancialFinancial
Credit Credit
Infrastructure Infrastructure
Industry,Commerce Industry,Commerce and Services and Services
Foreign Trade Foreign Trade
Indirect Indirect Operations Operations
SocialSocial Inclusion Inclusion
PresidentPresidentGuidoGuido MantegaMantega
ViceVice--President President Demian FioccaDemian Fiocca
President’sPresident’s OfficeOffice
DirectorDirector 11 DirectorDirector 22 DirectorDirector 55DirectorDirector 33 DirectorDirector 44
BasicBasic IndustryIndustry
Capital Capital MarketsMarkets
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BNDESBNDESOPERATIONAL PROCEDURE FLOWCHARTOPERATIONAL PROCEDURE FLOWCHART
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BNDESBNDES
BNDES Internal Governance
GIR Program Definition and implementation of an Enterprise Resource Definition and implementation of an Enterprise Resource
Planning (ERP) system based on Planning (ERP) system based on
xx Optimization and integration of business Optimization and integration of business
processesprocesses
xx IT supporting the processesIT supporting the processes
xx Advice from an expert consulting firmAdvice from an expert consulting firm
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BNDESBNDES
•• Adoption of a business model oriented by processesAdoption of a business model oriented by processes
•• Integration of information corporate systemsIntegration of information corporate systems
•• Increase in administrative and operational efficiency and Increase in administrative and operational efficiency and competencecompetence
•• Improvement in management and internal control mechanisms Improvement in management and internal control mechanisms
•• Improvement in client servicesImprovement in client services
•• Improvement in quality of information Improvement in quality of information
•• Creation of conditions for a better use of supporting tools and Creation of conditions for a better use of supporting tools and decision makingdecision making
•• Use of the marketUse of the market’’s best practices (benchmarking)s best practices (benchmarking)
Benefits Benefits
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BNDESBNDES
Development and implementation of an Development and implementation of an integrated solution projectintegrated solution project
Identify business strategy
“Big Six” Consultants
IT ser vice companies
Small local companies
Base the consulti ng & ser vices on a broad portfolio of packages
Threats
New entrants
Outsourci ng companies
IT platfor m companies
Strategic acquisitions
Outsourced IT departments
Rivals
Do it your yoursel f
Competent buyer s
Solution - commodities
Own integration
BMS/ERP SW supplier
change of partner
strategy
New and efficient ways of
implementing
New SW technol ogies
Keep a high level of R&D to be i n
front of technolog ydevel opments
Bundle sol utions and suppl y total soluti onsincluding all elements necessar y for ful l life
cyc le support
Remove availabl e qualified resources
from the mar ket through acquisitions,
alliances or hiring
Strategic
conflict
CustomerSupplier
General business cli mate
Design Processes in the new environment
Manage information resources
Manage human resources
Manage External Relationships
Provide financial support
Manage projects
Manage environmental. healt h, safet yand medical services
Manage Maintenance
Manage Research & Technology
Provide Vision & Strat eg y
Manage Improvement & Change
UnderstandMarket & Service
Marketproducts &
services
Sell & handle orders
Provide customer service
Manage distribution &
logistics
Manage Services
Manage production & material
Procure Goods & Services
View of future requirements
(To Be)
Analysis of
Improvement/impacts
Understanding ofPresent Model /
Processes (As Is)
System and Technology
Requirements
Define ImplementationStrategy
Implementation
Measurement and Monitoring
of Results Communication Plan
Management of Changes
Best Practices /Maturity
(EVTE)
Project Management
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BNDESBNDES
Program PlanningProgram Planning
5º Projeto
4th Project
6th Project
Implementation of ERPSolution – market solutions
Implementation of ERP Solution –Development of in-house systems
Technical Assistance – Quality Control and Guarantee for Implementation of GIR Solution
2nd Project
1st Project
Invitationto Bid for Consulting Services
Bidding Process for ConsultingServices
Internalpreparation for3rd project
3rd Project
Definitionof
ERPSolution
BidsERP Solution
DetailingProcesses
Approval ofImplementation Plan by the Board
5th Project
Phase 1:
Phase 2:
Consulting Services
Operational Risks