Nomad raises capital to become Brazilians’ digital account in dollars

After uniting several restaurants in a single app and changing the delivery market in Brazil, iFood’s co-founder Patrick Sigrist wants now to change the way Brazilians plan and execute their spending abroad. Founded with Eduardo Haber, who headed Advis and Tribeca Partners, fintech Nomad wants to be the Brazilian´s digital checking account in the American market.

In order to do so, the startup has just finished a series A round of $20 million. The investment was led by Monashees and Spark Capital, a fund that has already invested in Twitter and Slack, with participation by Globo Ventures and five other venture capital managers.

Structured in 2019 and launched last year, Nomad will use the funds to double the team, reaching 150 people by the end of the year, and to develop new products and services, including brokerage.

Nomad’s proposal is to provide access to more competitive services and rates for Brazilians who already make transactions in dollars, whether while traveling, studying or buying online.

“There are also niches of clients who live or study abroad, for example, and need to send or receive money from the family. There is a very large market that, today, no one is dealing with, and that was previously impossible to do,” says Mr. Sigrist. “We want to democratize the access to the global financial world.”

Nomad works in partnership with the American fintech Synapse, which provides the banking platform and allows cross-border operations of more than 50,000 accounts already open in the Brazilian app.

The account is free and customers use a physical and virtual card for transactions, which are accepted by virtual wallets like Apple Pay and in around 20 countries. In addition to transfers and payments, the app also gives access to some investments in the American market.

The company’s CEO is Lucas Vargas, who was the head of ZAP group for eight years. He estimates that the average cost for purchases abroad with a digital dollar account is 10% less than the amount a Brazilian spends today paying with a credit card. This happens because a traditional bank card charges between 4% and 7% of currency exchange spread and there is a 6.38% charge of Tax on Financial Transactions (IOF). The tax drops to 1.1% on dollar remittances and Nomad’s spread on the commercial dollar is up to 2%, according to the executives.

The reopening of countries for international travel, as the Covid-19 vaccination progresses, should help increase the opening of accounts, in the view of the partners – today, this demand has been focused on online shopping.

“The concept of banking as a service already exists and, as we build services on this platform and customers make use of it, we will see players seeking to offer these solutions,” says Mr. Vargas. Therefore, the fintech wants to speed up the pace and retain a large part of this public. Expanding the services to other currencies such as the pound and the euro is also in the plans.

ONEVC, Propel, GFC, Abstract and Vast also took part in the round. The company had already received around R$40 million in investment so far, from shareholders such as Norberto Giangrande, founder of Rico, Marco Abraão, of WGH Wealth Management, and José Leopoldo Figueiredo, founder of Hedging-Griffo.

Source: Valor international

https://valorinternational.globo.com/

São Martinho teams up with Ericsson and Vivo for “smart farm” project

From precision to ultra-precision agriculture. This is the leap that sugar-and-ethanol group São Martinho intends to take with the installation of 5G internet in its units, in a “smart farm” project that has been developed with Ericsson since last year and, now, is reinforced with Vivo for the network operation and development of new solutions.

With Ericsson’s support, some locations of the group’s plant located in Pradópolis (SP) have already started to have 5G installed. The sugar-and-ethanol mill is the largest in the world, with capacity to crush around 10 million tonnes of sugarcane per harvest. In early July, the 5g signal was activated in the industrial plant, in the plant’s equipment maintenance unit and at one portion of the agricultural area.

Now, the expansion of the network to more areas of the unit – and even to other plants in the group – will be carried out with Vivo´s support. “The actor who will allow the operation of this network was missing. This ecosystem will need all actors – from industry, operation and demand – to ensure that the technology is used in the most efficient way possible,” said Vinícius Dalben, CEO of Ericsson for the Southern Cone of Latin America.

With the expansion of 5G in the crop fields, which increases the speed of data traffic and offers low latency and variation time, activities will be able to be controlled remotely in real time and with high precision.

This can allow, for example, the operation of fully autonomous agricultural machines in the crops. “The machine that would operate totally autonomously already exists. But today the operator maneuvers it and manages the indicators. Now he no longer needs to be inside the machine, he can operate it from a distance,” said Fabio Venturelli, CEO of São Martinho.

With 5G coverage recently activated, São Martinho has already conducted a test with a XMobots drone, which identifies failures in planting lines. With the new signal, the Agricultural Operations Center (COA), which controls remote operations, received video transmissions and was able to control activities in real time, besides downloading all images.

The use of 5G in the drone was one of the 24 applications listed by the group with Ericsson and that could be developed with the new connection technology. The group is already considering using 5G to guarantee the automation of industrial processes through sensors on the machines and even cardiac monitoring of the company’s 12,000 workers with sensors on badges.

São Martinho’s plan, with Vivo’s support, is to expand the 5G coverage in stages, taking advantage of the current company’s own 4G infrastructure. “As we have proximity with São Martinho and Ericsson, we were able to design the appropriate infrastructure to meet today’s and future demand,” said Alex Salgado, vice president of B2B business at Vivo.

The first signals were installed with the fiber optic network that already exists in the unit and with a microwave solution from Ericsson, which guarantees transport to strategic remote areas without cables. The signal is occupying the 700 megahertz and 3.5 gigahertz (GHz) frequencies. The 700 MHz band reaches wider areas, covering 130,000 hectares, while the higher band is used to meet the demand for critical use and very high connection capacity.

To expand coverage, Vivo is considering not only the alternatives of 4G and 5G, but also high-capacity microwave radios with regulated frequency, besides satellite, Mr. Salgado said. But the advance of coverage will depend primarily on the development of technological applications in the first areas that receive 5G coverage and on the need to expand it to more areas of the sugarcane fields.

For this task, São Martinho will have the collaboration of startups selected by Cubo Agro, a hub that it launched with Itaú BBA and Corteva.

São Martinho does not reveal the value of the investment in installing the 5G, but the CEO, Fabio Venturelli, pointed out that the cost “will end up being small given all the potential for generating business”.

Source: Valor international

https://valorinternational.globo.com/

Court reverses R$46bn decision against Petrobras

Petrobras mantém foco em venda de ativos e desalavancagem, diz CEO a  analistas – Money Times

Federal Supreme Court (STF) Justice Alexandre de Moraes has granted an appeal by Petrobras and annulled a decision in the largest labor case ever in the history of the state-owned company, imposed in 2018 by the Superior Labor Court (TST). The decision with a multi-million impact was anticipated on Wednesday by ValorPRO, Valor’s real-time information service. The workers’ trade union FUP said it would appeal.

The TST ruled that the state-owned company adjusted the salaries of 51,000 employees, active and retired. In 2018, the company estimated an impact of R$17 billion, but after the earnings report for the first quarter of 2021, the forecast was already R$46 billion – an increase of 170%.

Mr. Moraes’ ruling reinstates lower court decisions in which Petrobras had won. According to those decisions, the legal and constitutional bonuses intended to remunerate special working conditions (such as night bonuses, risk premiums, and overtime, for example) should be included in the calculation of the complementary salary policy – the Minimum Remuneration per Level and Regime (RMNR), established in 2007 by a collective bargaining agreement.

When the case reached the TST plenary, the score, decided in the last vote, was favorable to the workers. The majority of the collegiate understood that those “extras” should be paid separately.

Petrobras appealed to the STF, but it took more than one year to reach the office of Mr. Moraes, the rapporteur, because of red tape. Then, it took him another 18 months until he moved on with the case.

Justice Moraes handed down his decision this Wednesday. He said that the TST decision “deserves to be reformed, and no unconstitutionality can be seen in the terms of the agreement freely signed between the appellant companies and the trade union.”

For him, the inclusion of the extras in the calculation did not reduce labor rights, because the collective agreement “did not remove” the extras “from those who work in more serious situations.”

The decision took the fellow justices by surprise. Behind the scenes at the Supreme Court, the understanding was that the court had to first decide whether the case had a widespread public reaction or not, and then analyze the merits.

In addition, for a wing of the STF, it would be more appropriate to first pacify a series of labor issues pending trial and that could directly interfere in the evaluation of the concrete case, such as the action that discusses the so-called “agreed over law” – a recent law that makes any agreement stronger than legislation.

Although officially annulled Wednesday, the TST’s decision had not yet had any practical effect. Injunctions granted by the Supreme Court itself had put on hold about 45 collective actions and 7,000 individual ones until there was a definitive outcome. In other words, Petrobras will not need to recover any amount, because the workers were not effectively benefited.

“It is surprising that an issue of this nature and complexity is decided in a monocratic way and during the Supreme Court recess,” said FUP’s general coordinator, Deyvid Bacelar. For him, because it is individual, the decision is not definitive.

The organization says it is important to take the case to the floor of the court so that FUP has the opportunity to make oral arguments – as it happened in the TST’s trial in 2018.

Lawyer Francisco Caputo, who represents Petrobras, said decision Mr. Moraes’s decision “gives more legal certainty to the Brazilian business environment,” even if the case can still have a floor vote.

According to him, it is “a very significant amount” in a case that “was supported by injunctions”. “There is no illegality in the case. The company has always acted in good faith, with the objective of promoting the well-being of the employees, responding to the pleas of the unions themselves.”

Source: Valor international

https://valorinternational.globo.com/

Governors take forest restoration, bioeconomy projects to John Kerry

EU scientists see the forest for the trees (EU-Forest) | EU Science Hub

Seven governors representing all regions of the country have a virtual meeting scheduled on Friday with John Kerry, U.S. special envoy on climate. On that occasion, they will present nine projects for forest restoration, bioeconomy, and social and productive development. The projects are expected to be put in place in 24 to 72 months and are estimated at $300 million.

The meeting will last one hour. Governors Eduardo Leite (Rio Grande do Sul), João Doria (São Paulo), Reinaldo Azambuja (Mato Grosso do Sul), Wellington Dias (Piauí), Flavio Dino (Maranhão), Helder Barbalho (Pará) and Renato Casagrande (Espírito Santo) will take part.

“It is the first step of a direct relationship of the governors with the central government of an important country,” says Mr. Casagrande (Brazilian Socialist Party, PSB), who coordinates the Governadores pelo Clima (Governors for Climate) coalition, which is coordinating the effort. “It is natural that governors seek global connections for local actions,” he said. Mr. Casagrande makes a point of saying that the initiative “does not compete with the federal government, it is complementary.”

Socio-environmental talks between the Bolsonaro and Biden administrations froze soon after the summit organized in April by the United States President Joe Biden. In a speech at the event, Mr. Bolsonaro promised to set aside more funds for inspections against illegalities in the Amazon, but, afterwards, the funds for that were actually curbed, a development poorly received by the U.S government. In addition, information from the U.S. were key for an investigation against former Environment Minister Ricardo Salles and leaders of his ministry and federal environmental agency Ibama on suspicion of irregularities in exports of wood from the Amazon.

The meeting with Mr. Kerry is expected to last an hour and is the result of talks between Governor Casagrande and Terry Tamminem, who was secretary of the California environmental protection agency during the Schwarzenegger administration. The connection was made by the organization R20-Regions of Climate Action founded by the former governor of California.

On the occasion, the governors will present nine projects. One, from the Southeast region, is about integrated management of water resources and revitalization of watersheds, including tackling extreme events such as floods, droughts, erosion and landslides to plant native species of the Atlantic Forest. The group expects to generate more than 40,000 jobs with this project. Another project from this region provides for the development of production chains and the strengthening of conservation units in the Atlantic Forest, working with 50 associations and seeking to revitalize and protect mangrove and sandbank areas.

As for the Amazon rainforest, the idea is to execute an action plan for the development of Pará with exports of products compatible with the forest. In the Northeast region, one project seeks to combat deforestation and foster restoration of the Caatinga and the Atlantic Forest. Another project aims at producing and planting seedlings in degraded areas, seeking income for populations in extreme poverty in Maranhão.

In the Central-West, one initiative seeks to stimulate better soil use practices, to reduce sediments in the watersheds that supply the Cerrado and the Pantanal wetlands. The other seeks to promote good conservation and fire-fighting practices in the Pantanal wetlands. In the South region, the idea is to improve the quality and quantity of water in watersheds and recover forest environments in the Pampa and Atlantic Forest.

“We have to start a fundraising strategy with the American government within a governance model,” says Mr. Casagrande, who defends the creation of a national public consortium, uniting the states with the objective of putting climate policies in place. A fund would be linked to the consortium. “The states could present projects to this fund, which would have funds from the U.S., the European Union, private institutions and whoever else is interested in investing in Brazil to protect natural resources,” the governor said.

“Nothing replaces the role of the national government, but the states would have governance in a field vital for the survival of the planet. But for Brazil to make its contribution, the world has to help us preserve our natural wealth, and for this, we have to generate opportunities for those who want to invest in the country,” he said. “The time when the carbon market is regularized, the potential that Brazil has to preserve and recover forest, and produce renewable energy, is great.” He expects this to happen in the next round of climate negotiations, CoP 26, in Glasgow in November.

Source: Valor international

https://valorinternational.globo.com/

Jump in IPOs and M&As drives banks fees higher

M&A: uma forma de crescer | Endeavor Brasil

The soaring number of share offerings, between IPOs and secondary offerings, and a considerable volume of mergers and acquisitions transactions at the beginning of the year are already very evident in investment banking revenues. The fee pool for the first half is 121.8% higher than in the same period last year, at $697.85 million, against $314.64 million in the first half of 2020. For some banks, it was even higher – JPMorgan, BTG Pactual, Citi and XP Investimentos tripled their numbers in the comparison.

The beginning of last year was affected by the pandemic, but the pace now exceeds the beginning of 2019 as well. The numbers are from data Dealogic and they are not always a consensus among banks, especially as fees for M&As are estimated, but they provide a proxy for the market. Historically, the average annual revenue for banks in market operations in Brazil in good years is around $800 million to $1 billion, another clear indication of the market heating in a single semester.

“It’s an overheated year, in all products, and one that has accelerated a lot in the last two and a half months, after a slowdown due to Covid and political events,” says Cristiano Guimarães, head of the investment bank Itaú BBA, who leads the fees ranking in the period.

The flow of foreigners to the stock market has improved, although it is not as relevant as it was in the past. Last week, the American investment management company T. Rowe Price took part in two offers, Magalu’s secondary offering and the debut of Unifique – the company is already active in the country, but it had not been writing very relevant checks in initial offerings. GMO, which has also had a lot of presence in Brazil, was absent for months, and took part in Multilaser’s offering.

There are offerings with greater price selectivity, some reducing the price band, others not materializing, some taking off with high demand, such as SmartFit and Armac. Banks consider this price dynamic to be natural. “Market insight has to exist and is healthy. It is not always that the investor and the entrepreneur will agree on value and perspectives”, says one banker.

On Tuesday the stock market was down, driven by China, and last week it was shaken by the fear of the advance of the delta variant of the coronavirus. In the meantime, five IPOs were launched in Brazil, and one was canceled on the day of pricing.

“The market has changed and is now much more functional,” says Fabio Nazari, who has led BTG Pactual’s ECM (Enterprise Content Management) area since 2007. “There used to be a lot of rush for the IPO window and now, even when there are more difficult moments for transactions, with greater volatility, the operations continue to be carried out,” he adds “The new reality is that the market gets better or worse for offering, but it doesn’t close.”

There have been 51 offerings this year, 34 of them IPOs, totaling R$100 billion raised. “Last year, there were 60 operations, and with what’s still in the pipeline, it should exceed R$150 billion in volume, beating the last two years, which were strong for offerings,” says Hans Lin, investment banking co-head at Bank of America.

“The IPO pipeline has been very good,” adds Mr. Guimarães. “Maybe it wasn’t clear to many people how many good companies in the country are able to go to market. I can’t remember another window in which investors looked at practically all the operations, as is happening.”

The demand has led banks to strengthen their teams. BBA has recently hired four senior bankers from JP Morgan, brought in the new head of sales from BTG and an executive from Santander to the desk. The team increased 10% over last year and should close the year 15% larger. At XP’s IB, which started to appear in the main rankings in the last two years, the team increased 30% since the beginning of last year and the expectation is to close the year with double the revenue in the area.

“The second semester is usually even stronger than the first and considering that next year is an election year, companies tend to anticipate plans to access the market and avoid volatility linked to the agenda,” says Pedro Mesquita, head of XP’s investment bank. “There is a little bit of everything, such as sectors that participated little in the stock market and have now come to the market, such as technology and agribusiness.

Source: Valor international

https://valorinternational.globo.com/

Inflows gain strength and offset outflows from 2020

Thenet inflow of direct investments in the Brazil (IDP) has been below the estimate of the Central Bank (BC) for three months now. At the same time, the inflow of portfolio resources is gaining strength and has already more than compensated for the net remittance registered last year, caused by the pandemic.

In June, Brazil registered net inflows of only $174 million of IDP, the monetary authority informed Tuesday. The estimate was for inflows of $2.5 billion. The last time the inflow of IDP was in line with the BC’s estimates was in March, when there was a $6.9 billion inflow, with a projection of $7 billion.

The IDP is considered by many economists to be the most stable source of financing for the external accounts. In this account are included: resources destined to capital participation; direct loans granted by multinational companies’ headquarters to the subsidiaries in the country and vice-versa; return of Brazilian investments abroad.

In a press conference to comment on the June data, the head of the Central Bank’s statistics department, Fernando Rocha, said that the lower-than-expected IDP result last month can be explained by a “punctually” negative performance of reinvested profits. The account was negative by $364 million. In addition, inter-company operations were also negative, reaching $2.2 billion. According to Mr. Rocha, the number shows that the amortizations paid abroad from these operations were greater than the new credits received in Brazil.

In turn, in the accumulated 12 months to June, the IDP was $46.6 billion, equivalent to 3.02% of the GDP. It was the second consecutive month of decline in this type of comparison. Two months earlier, in April, the accumulated figure for 12 months was $52.7 billion, or 3.52% of the GDP.

The Central Bank projects that the IDP will end the year at $60 billion, or 3.8% of GDP. “Higher contribution is expected from the equity component, which should reflect the acceleration in profits and the better performance of the economy, offset by lower net inflows of inter-company loans,” the monetary authority said in the June Quarterly Inflation Report (RTI).

The median estimate of 62 financial institutions and consultants was $55 billion, according to the questionnaire prior to the last Monetary Policy Committee (Copom) meeting, distributed in early June. For July, the monetary authority’s projection is an inflow of $4.7 billion. In the partial monthly balance until Thursday, inflows totaled $4 billion.

Meanwhile, the portfolio investments negotiated in the domestic market were positive by $5.1 billion last month. The Central Bank does not make monthly projections for the performance of this type of resource, normally more volatile. In the first half of 2021, there was an inflow of $21.6 billion, against the remittance of $8.5 billion in the whole of last year. The result of the first six months of this year was positive both for stocks and investment funds ($9.5 billion) and for fixed income ($12.1 billion).

“Non-resident investors have already fully recomposed their positions in the country and continue to make investments,” said Mr. Rocha.

Finally, the current account deficit over 12 months was $19.6 billion last month, equivalent to 1.27% of the GDP. In other words: even with a recent performance below expectations, the IDP, which was 3.02% of GDP, continues to comfortably finance the negative balance. The current account balance measures the difference between what the country spends and what it receives in international transactions related to trade, income, and unilateral transfers. Both the Central Bank’s projection and the median of financial institutions and consulting firms is for a slight surplus this year of $3 billion, or 0.2% of GDP. For July, the monetary authority calculates a positive result of $1.3 billion.

The net inflow of direct investments in the country (IDP) has been below the estimate of the Central Bank (BC) for three months now. At the same time, the inflow of portfolio resources is gaining strength and has already more than compensated for the net remittance registered last year, caused by the pandemic.

In June, Brazil registered net inflows of only $174 million of IDP, the monetary authority informed Tuesday. The estimate was for inflows of $2.5 billion. The last time the inflow of IDP was in line with the BC’s estimates was in March, when there was a $6.9 billion inflow, with a projection of $7 billion.

The IDP is considered by many economists to be the most stable source of financing for the external accounts. In this account are included: resources destined to capital participation; direct loans granted by multinational companies’ headquarters to the subsidiaries in the country and vice-versa; return of Brazilian investments abroad.

In a press conference to comment on the June data, the head of the Central Bank’s statistics department, Fernando Rocha, said that the lower-than-expected IDP result last month can be explained by a “punctually” negative performance of reinvested profits. The account was negative by $364 million. In addition, intercompany operations were also negative, reaching $2.2 billion. According to Mr. Rocha, the number shows that the amortizations paid abroad from these operations were greater than the new credits received in Brazil.

In turn, in the accumulated 12 months to June, the IDP was $46.6 billion, equivalent to 3.02% of the GDP. It was the second consecutive month of decline in this type of comparison. Two months earlier, in April, the accumulated figure for 12 months was $52.7 billion, or 3.52% of the GDP.

The Central Bank projects that the IDP will end the year at $60 billion, or 3.8% of GDP. “Higher contribution is expected from the equity component, which should reflect the acceleration in profits and the better performance of the economy, offset by lower net inflows of inter-company loans,” the monetary authority said in the June Quarterly Inflation Report (RTI).

The median estimate of 62 financial institutions and consultants was $55 billion, according to the questionnaire prior to the last Monetary Policy Committee (Copom) meeting, distributed in early June. For July, the monetary authority’s projection is an inflow of $4.7 billion. In the partial monthly balance until Thursday, inflows totaled $4 billion.

Meanwhile, the portfolio investments negotiated in the domestic market were positive by $5.1 billion last month. The Central Bank does not make monthly projections for the performance of this type of resource, normally more volatile. In the first half of 2021, there was an inflow of $21.6 billion, against the remittance of $8.5 billion in the whole of last year. The result of the first six months of this year was positive both for stocks and investment funds ($9.5 billion) and for fixed income ($12.1 billion).

“Non-resident investors have already fully recomposed their positions in the country and continue to make investments,” said Mr. Rocha.

Finally, the current account deficit over 12 months was $19.6 billion last month, equivalent to 1.27% of the GDP. In other words: even with a recent performance below expectations, the IDP, which was 3.02% of GDP, continues to comfortably finance the negative balance. The current account balance measures the difference between what the country spends and what it receives in international transactions related to trade, income, and unilateral transfers. Both the Central Bank’s projection and the median of financial institutions and consulting firms is for a slight surplus this year of $3 billion, or 0.2% of GDP. For July, the monetary authority calculates a positive result of $1.3 billion.

Source: Valor international

https://valorinternational.globo.com/

Rumo opens main stretch of railroad in Goiás

American Railroads Are Already in Recession With No End in Sight |  Transport Topics

Cosan’s logistics company Rumo starts operating the most important stretch of Norte-Sul Railroad this Tuesday. In March, the company had already opened the track between Estrela D’Oeste, in São Paulo, and São Simão, in Goiás. Now, the company set up its terminal in Rio Verde, Goiás, which considerably expands the volume hauled.

“The Rio Verde terminal is 200 kilometers far from São Simão. It is closer to the producers in the southwest of Goiás. Besides, it will be able to receive cargo from the East of Mato Grosso,” Pedro Palma, Rumo’s commercial vice-president, said. The R$400 million terminal can handle 11 million tonnes of grain per year.

Rumo took over the concession for the central section of the Norte-Sul railroad in July 2019 and committed to complete the construction works and finally get off the drawing board the corridor designed to be Brazil’s logistics “backbone.” Rumo’s railroad links Estrela D’Oeste with Porto Nacional, in Tocantins. Going south, the track connects to the Malha Paulista, another rail concession operated by Rumo that ends in the Port of Santos. Going north, it is connected with the VLI and Vale railroads, which end in the port of Itaqui, in Maranhão.

Until now, Rumo’s investments in the Norte-Sul railroad have been focused in the southern stretch, to make possible an export way ending in Santos fully operated by the company.

The company has yet to finish the railroad. At the beginning of the year, the company expected to do so later this year. Currently, it wants to finish it “in the first half of 2022,” Mr. Palma said. The last stretch of around 290 kilometers still has to be delivered, between Rio Verde and Ouro Verde de Goiás. The next stretch, which ends in Tocantins, is also already in operation.

When the entire railroad is completed, it will also be possible to attract agricultural cargo from the North of Goiás and the South of Tocantins to the Port of Santos. In addition, the idea is to take containers from Maranhão to the Southeast region, Mr. Palma said.

However, the assessment is that the largest volume will be concentrated “from Rio Verde downwards.” “There is firm demand in the South and Southwest of Goiás. We believe that the arrival of the logistics infrastructure will encourage producers in the other regions served, but these are longer-term processes,” he said.

At the moment, the railroad’s focus is on transporting grains, such as soybeans, corn and soy meal. But there is potential for other cargoes. In Rio Verde, a fertilizer terminal is already under construction in partnership with Andali (a joint venture with the American cooperative CHS), where there will be structure for cargo transshipment and fertilizer mixing. The plant is expected to be ready by the first half of 2022.

A fuel facility should also be built to receive gasoline and diesel from the Paulínia refinery (Replan) and biofuel from the region’s agricultural producers. “We are in the final stages of detailing the project and selecting the right partner,” Mr. Palma said. The company expected to start operations in the second half of 2022 or early 2023, he said.

Despite investments shared with strategic partners, the executive says terminals can serve other companies.

Besides Norte-Sul, Rumo will be able to consolidate its position in the agricultural export route with another project announced last week: the extension of Malha Norte, in Mato Grosso. The railroad, which currently goes as far as Rondonópolis, is expected to reach Lucas do Rio Verde, taking cargo to Santos.

The extension of the railroad had been negotiated with the federal government, but as talks did not advance, it ended up being done through a project of the Mato Grosso government. The contracting will still have to go through call for tenders, but Rumo is highly likely to win. In Mr. Palma’s view, it makes no difference whether the work will be done via the federal or state government, as long as it materializes.

In the market, one question mark is the legal security of the state project, based on a law approved earlier this year to authorize railroad works without concession – in other words, private-sector projects, executed without bidding or direct participation of the state. Rumo’s executive denies any uncertainty. “The government did it in a very diligent way, with transparency. We expect the project to move forward without problems.”

Source: Valor international

https://valorinternational.globo.com/

Search for cost-cutting boosts solar franchises

Franchises dedicated to the sale of small solar generation systems, typically installed on residential and commercial roofs, have seen exponential business growth in 2021.

Big chains in this niche – as Solarprime, Energy Brasil, and Blue Sol – expect to double the number of stores compared to last year and are looking for ways to differentiate themselves in an increasingly competitive market. Strategies range from franchises in containers and offering financing for the acquisition of photovoltaic systems to plans to cross-sell chargers for electric cars.

The increase in energy tariffs this year, as a reflection of the water crisis, further accelerated the expansion of distributed solar energy, a market that until 2017 was incipient and today already corresponds to more than half of the installed solar generation power in the country. Today, small solar systems are concentrated mainly in homes — they account for 75% of the 520,000 existing systems and 40% of the 6 GW of power of distributed generation, according to the Brazilian Association of Photovoltaic Solar Energy (Absolar).

With more consumers seeing their own energy production as an alternative to reduce their electricity bills, more entrepreneurs became interested in franchises in the segment.

The main driver of franchise sales has been the “home-based” model, which requires reduced investment and suffered less from the restrictions imposed by the pandemic. “We have grown a lot in the ‘home-based line. We consider there is a suitable profile of entrepreneur seeking a cheaper way to enter the solar segment”, says Solarprime CEO Marcelo Nogueira.

Based in Campinas, about 100 kilometers from São Paulo, Solarprime was born in 2016 and today is controlled by three partners – Raphael Brito, Agnaldo Marques, and Sandro Cubas, each with specific “expertise” in the business world. From 2018, when the solar market began to grow, to now, the company saw revenue grow 10 times, and the expectation is to reach R$300 million in 2021. In number of stores, Solarprime closed last year with 330 units, has already reached 400, and intends to end this year with 500.

To maintain the expansion route, the company aims at new areas and ways of acting. According to Mr. Nogueira, Solarprime wants to verticalize the business, which will go through the financing offer of the generation systems and the direct import of the equipment that make up the solar “kits”, such as panels and inverters.

“On the financing side, we can start with simpler models, with credit-receivable funds (FIDCs) and companies that provide this service. Naturally, we would evolve to have our own license. We want to be ready at the beginning of the year to start making concessions,” he says.

The investment for installing solar generation systems is still relatively high, but new lines of credit are making the alternative more affordable. By the current rules of the electricity sector, the consumer gets a drastic and immediate reduction in electricity bills when she switches to producing her own energy. The idea is to take advantage of this situation to fit the installments of the financing, without creating an additional cost.

At Energy Brasil, the strategy to stand out in the market involves taking the brand to the streets. The company will abandon the sale of the “home office” franchise model because it considers that it brings little visibility to the brand. “When you go out to buy home appliances, construction materials, you have some shops in your head. But for solar energy today there is no reference. We want to occupy this space with physical units”, says managing partner Marcelo Macri.

Founded in 2019, Energy Brasil already has 400 stores and intends to reach 600 by the end of the year, doubling against the 300 at the end of 2020.

Today, 70% of Energy Brasil’s network is made up of “home office” franchises, which will no longer be marketed — the expectation is that part of the units will migrate to physical points. The big novelty will be the container store, which allows the franchisee to circulate between different publics, settling near shopping malls and condominiums, for example.

One of the pioneers in the solar market, Blue Sol was born in 2008 with the training of professionals and, in 2017, debuted the franchise model. Today, it has 100 franchises and 20 more being implemented. The goal is to reach the end of 2021 with 330 units, between open and contracted franchises. The turnover is expected to double by 2020, reaching R$150 million.

From this year, the company started to count on a strategic partner: EDP Brasil, one of the main groups in the national electricity sector. “EDP legitimizes our business model, shows that solar energy has already gained a lot of importance for the sector. They bring us a lot of knowledge, good opportunities, and a very strong governance,” says José Renato Colaferro, founding partner and Chief Operating Officer of Blue Sol.

For the future, the company aims at opportunities with the development of electric mobility in the country. “Solar generation will be the electric car gas station, the customers will generate their own fuel on the roof of their home, company,” says Mr. Colaferro. “We imagine one day doing cross-selling of electric chargers. Infrastructure has to be created before the growth of the electric vehicles fleet.”

Source: Valor international

https://valorinternational.globo.com/

Banks likely to see higher profits in second quarter

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With a fairly low base of comparison in the second quarter of last year, when they were still making provisions to deal with the pandemic, Brazil’s largest banks are expected to report an almost 60% jump in profit for the April-June period. The expectation is that credit portfolios will continue to grow at a healthy pace and there will be a slight deterioration in nonperforming loans, which is more than normal given it was at historical lows due to the pauses in payments offered to customers. Financial margins, however, should remain under pressure amid increased competition, but the expansion of lines with larger spreads could ease this factor.

Itaú, Bradesco, Santander and Banco do Brasil should have a combined profit of R$21.5 billion in the second half, up 59.9% year over year, but a quarterly drop of 1.6%, a survey by Valor with eight analysts shows.

For J.P. Morgan analysts, the banks’ appetite to offer loans is growing as activity improves with the reopening of the economy and the advance of vaccination. They point out that data from the Central Bank indicate acceleration of loans, to 16% in May from an annual high of 14.5% in March, and among private-sector domestic banks this expansion is even stronger, of 24%. “Riskier products with higher spreads are growing faster, which can boost margins.”

The Itaú BBA points out that investors will be looking for signs of recovery in the financial margin, but that there should still be no substantial improvement in the second quarter. According to analysts, the period was still marked by mobility restrictions due to the pandemic and a stronger recovery in margins should come more in the second half of the year. “Increased confidence and normalization of household savings should drive demand for higher-return credit products. This will also be a better environment for banks to adjust prices upwards and compensate for the gradual increase in financing costs due to the Selic policy interest rate hike.”

Analysts point out, however, that a failure to improve the financial margin in the second half would undermine the profit forecasts for banks. Itaú BBA says this would fuel pessimists who argue that margin compression is more related to competition and regulation, and not so much to a lower Selic. “Brazil will enter phase two of open banking, probably increasing competition in the credit segment and casting long-term doubts if the recovery of spreads does not materialize. That is, if bank spreads do not improve with the growth of almost 6% of the GDP and a rate increase cycle of 4 percentage points, it will be more difficult to argue for a brighter future.”

“We have seen loans grow, but revenues, not so much,” Bruno D’Avilla, an analyst with Mauá Capital, said. “To be more optimistic about banks [stocks], revenue will need to grow more.” He expects a new round of portfolio expansion, with nonperforming loans still under control, below the pre-pandemic level, and that the level of provisions will fall. There will be great attention, therefore, on how the guidances will be for 2021 – whether there will be adjustment in these guidances or, at least, a change in the message about the prospect of meeting them.

XP analysts agree that higher stock prices of big banks in a “disruption” scenario caused by both regulatory interventions and increased competition are worrying. This assessment, coupled with the risks with open banking and more aggressive competition in the wholesale sector, led to a shift from optimistic to cautious. “While our recommendation for banks in June 2020 paid off, our hedging prices grew by an average of 26%, justifying a less optimistic view of the sector.”

For UBS, the financial margin should be almost stable in the comparison of the second with the third quarter, but with a better quality, that is, with a greater part formed by the margin with clients and a smaller portion of the financial results.

With portfolios growing strongly and margins relatively stable, the other focus is nonperforming loans. However, analysts point out that banks’ asset quality metrics should stay at low levels. UBS says Central Bank data showed a 0.2 percentage point increase in nonperforming loans in April and May. “Loans with more than 90 days in arrears should continue at a very low level, but with an uptrend, after ending the first quarter at 2.2%, only 0.05 percentage point above the historical low.”

Unlike what happened in the United States, where banks began to reverse provisions already in the first quarter, analysts do not believe in this possibility here. The expectation is that they will provision volumes below what goes into default, thus gradually consuming excess reserves. “Hedging began to fall in the first quarter of this year and this trend is expected to continue in the second,” says UBS.

Source: Valor international

https://valorinternational.globo.com/

UBS sees window of opportunity for Brazilian assets

Brazilian markets have a “window of opportunity” as prices are still low amid economic recovery, says Ronaldo Patah, chief strategist at UBS Consensus. For him, the global scare with the Delta variant of the coronavirus should not translate into a more serious problem for the local economy. In a report with investment recommendations for Brazil, seen first by Valor, UBS says it prefers stocks and global assets, while inflation-linked bonds, floating-rate bonds and fixed-rate securities are among the least preferred by the bank at the moment.

Nevertheless, Mr. Patah notes that both the beginning of tapering by the Federal Reserve and the 2022 presidential elections may bring volatility to Brazilian assets.

“We still see high-risk appetite, very strong profit growth in the United States … Everything should continue to attract flow to the stock market and to [strengthen] the foreign exchange rate here. Our target for the real in September is 4.80 to the dollar. We have an opportunity there. As the pandemic slows down, the economy normalizes and the Congress votes on reforms, politics should also calm down. This is positive for the market. In this context, the real may reach 4.80 to the dollar,” Mr. Patah said.

The global environment remains very positive despite recent concerns with the increase in the number of cases of Covid-19 in some countries, according to the strategist. “These are normal market fluctuations, which we don’t see as trend changes,” he said. Although the Delta variant may delay reopening in some countries where mass vaccination is slow, there should not be a setback, Mr. Patah said. In that sense, UBS maintains a pro-risk allocation around the world.

“In the global scenario, we recently changed the recommendation for currencies,” Mr. Patah said, pointing out that after recent inflationary surprises in the United States, UBS sees the euro losing ground against the greenback. “In the coming months, the Fed will have to prepare the market for a potential interest rate hike, even if it happens only in 2023. Over the next 12 months, the discourse should be more hawkish, and eventually the Fed will start to mop up liquidity and the dollar is likely to strengthen again,” he said.

In Brazil, these effects, alongside caution with 2022 presidential elections, are likely to take the foreign exchange rate to five reais to the dollar at the end of the year and to 5.3 in March and June 2022.

“For the next year, as there are elections, I am more concerned about the exchange rate. I wouldn’t say that stocks are dangerous, but they can become much more volatile,” Mr. Patah said. For him, even the beginning of the normalization of monetary policy in the U.S. by the Fed should not cause the stock market to enter a downward trend, but the biggest risk is to increase volatility ahead.

Despite its optimistic view of the Brazilian stock market, the UBS strategist maintains a more cautious posture with fixed-income assets. The normalization of monetary policy is cited as the main risk. “Inflation has not yet stabilized, expectations for 2021 continue to be revised upwards, but the Central Bank has had some success in stabilizing expectations for 2022, which are now at 3.75%. As there is still the risk of power rationing and the economy is now being kick-started, the service industry tends to see faster inflation amid a potential pent-up demand,” he said.

Inflation should not cool down so much in the short term and, for this reason, UBS prefers a wait-and-see approach for some fixed-income assets, expecting “more premium” in the curve ahead. In addition, for now, the fiscal scenario is not worrying, “but we don’t know how [cash-transfer program] Bolsa Família and the budget debates [in Congress] will turn out.” Potential noises may impact fixed-income assets, the strategist said.

A third risk mentioned is the rise of long-term international interest rates. “We are concerned. The ten-year Treasury rate is at 1.28%, and it should move towards 2%,” he said. This affects inflation-indexed bonds a little because these are long-term securities, he said. If the yields of 10-year Treasury notes rise to 2%, inflation-indexed bonds tend to follow suit.

Source: Valor international

https://valorinternational.globo.com/