Central Bank explains inflation target burst in 2021

O presidente do Banco Central, Roberto Campos Neto, durante lançamento do Novo Marco de Garantias.

The COVID-19 pandemic, the increase in the global price of commodities (primary goods with international price quotation) and the water crisis were the main reasons that justify the failure to meet the inflation target in 2021, the president of the Central Bank Roberto Campos Neto said. Due to a legal order, he sent this Tuesday (Jan. 11), a letter to the Minister of Economy Paulo Guedes, and to the National Monetary Council (CMN) justifying the official inflation of 10.06 percent in 2021, according to the Extended National Consumer Price Index (IPCA).

The official inflation target for last year was 3.75 percent, with a range of tolerance of 1.5 percentage point. The index, therefore, could vary from 2.25 to 5.25 percent. This was the sixth time, since the creation of the current inflation system, in which the president of the Central Bank had to justify the failure to meet the target.

According to Campos Neto, much of the high inflation in 2021 was a global phenomenon driven by the COVID-19 pandemic. The disease affected trade flows across the planet, creating bottlenecks in the distribution of products. According to him, the phenomenon affected not only emerging countries, but also developed economies.

“Pressures on commodity prices and on global production chains reflect the changes in consumption patterns caused by the pandemic, with a proportionately greater share of demand directed to goods,” Campos Neto wrote. “In fact, the significant acceleration of inflation in 2021 to levels above the targets was a global phenomenon, affecting most developed and emerging countries.”

The last time the president of the Central Bank justified the noncompliance with the inflation target was in 2017. However, inflation ended that year below the target floor, at 2.95 percent, against a minimum limit of 3 percent for the IPCA.

Source: Agência Brasil

https://agenciabrasil.ebc.com.br/en

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Brazil expands data centers driven by demand from cloud giants

Data Centers: tudo que você precisa saber - Olhar Digital

Given the increase in demand for cloud services and the expected improvement of the structure of Chinese providers in Brazil, companies specializing in building large data centers in the country, such as Ascenty, Equinix, Odata, Scala, say that 2021 was a year of high demand and 2022 will be no different.

Besides the increase in the structures of large U.S.-based providers (AWS, Google, Microsoft, IBM, Oracle and others), which contract operations in the interior of São Paulo and in Rio de Janeiro, the expansion plans include projections for operations of Chinese giants.

Huawei, which began offering cloud services in Brazil in 2016 using the structure of phone carrier Vivo before having its own data centers in 2019, is a client of companies that build data centers in the country. Huawei has two data centers in the city of São Paulo and has expansion plans for 2022. “We have an aggressive expansion plan, but we cannot unveil this to the market yet,” the company told Valor.

Tencent, one of the largest internet service providers in the world – owner of video game developer Riot Games, famous for the title League of Legends – opened its first cloud center in the country in November. Then, the Chinese company said that the data center in São Paulo will serve companies in Brazil and in other Latin American countries as part of a global network of Tencent Cloud’s data centers with footprint in 27 regions.

Brazil is also in sight of Alibaba’s cloud division. Sources say the country is key for Alibaba Cloud, which currently operates in 70 countries, including two data center infrastructures in the East and West coasts of the United States, but has no operations in Latin America.

Alibaba, China’s main provider of computing cloud infrastructure as a service, held the third largest share of the world market in 2020 (9.5%), data by consultancy Gartner show. The first one, AWS, held 40.8% of the market, followed by Microsoft with 19.2%. Huawei debuted in the ranking of the five largest providers in 2020, in the fifth position, with a 4.2% share, behind Google, the fourth place, with 6.1%.

Alibaba’s plans, however, have no date yet. The group operates in the country through online marketplace AliExpress and, more recently, through logistics company Cainiao, which started to meet AliExpress demands locally last year.

After the rush for business digitalization at the beginning of the pandemic, 2021 was a year of consolidation and expansion of projects, which raised the demand for outsourced data centers. “Companies’ digitization drive consolidated in 2021,” said Eduardo Carvalho, general director in Brazil at Equinix. “Despite the economy and the market, all market segments increased investments in cloud computing last year,” he said.

Companies’ data and applications migration to the cloud also reflects the search for cost reduction with machine maintenance, space to expand their operations and the concern with network resilience. “I visited a customer in the region of Avenida Paulista, in São Paulo, who put big servers in the office reception because he handled all the data infrastructure internally, but ran out of space,” said Marcos Siqueira, chief operating officer at Ascenty.

The company, which has the largest number of active data centers in the country – 18 since its foundation in 2010 – invested R$160 million to open two data centers in Hortolândia (São Paulo) and Rio de Janeiro. This year, it will open its fifth data center in Hortolândia.

To create resilience zones, with more than one data center as a safe haven, the expansion of Brazilian data centers has been concentrated in cities near the city of São Paulo, such as Barueri and Osasco, and the nearby countryside, such as Hortolândia, Vinhedo and Santana de Parnaíba.

Source: Valor international

https://valorinternational.globo.com/

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Drought in South region makes crop projections plunge

Drought | World Meteorological Organization

The drought in the South of Brazil, which has caused losses in crops in Paraná and Rio Grande do Sul, made the National Supply Company (Conab) on Tuesday to reduce its estimate for harvest of grains and fibers in 2021/22, to 284.39 million tonnes. Last month, when forecasts were positive, they were at 291.07 million tonnes.

Still, if the new number is correct, the harvest will be 12.5% higher than in 2020/21, with 252.79 million tonnes. This is supposed to happen because the planting area, already defined in the summer, grew 4.5% between the seasons, to 72.11 million hectares.

In the case of soybeans, the increase in area was 3.8%, which will probably guarantee a record-breaking harvest, even with the crop failure in the southern states. Conab’s projection is now for a harvest of 140.5 million tonnes, compared to 142.8 million last month, but 2.3% higher than in 2020/21.

For summer corn, whose estimates were for a recovery of production due to good prices, the forecast now is for a harvest of 24.8 million tonnes, only 0.3% higher than in 2020/21 and 14.7% lower than forecast last month.

Putting together the three crops of grain, the estimate is that the country will harvest 112.9 million tonnes in 2021/22, 29.7% more than the last cycle, when the main crop (winter) was punished by drought.

In the case of rice, whose production is concentrated in Rio Grande do Sul, the state company continues to estimate a production of 11.4 million tonnes because most crops are guaranteed with irrigation. This estimate represents a decrease of 3.2% compared to 2020/21.

For beans ¬— which also have three crops per season in Brazil — the expectation is a growth of 7.2%, to 3.08 million tonnes. This result is due to the expected increase in average yields for crops, which, like corn, were also severely affected in 2020/21 by drought and frost. In comparison with the previous report, Conab cut the estimate by 1.7% due to the problems in Paraná.

For cotton lint, Conab forecasts a harvest of 2.7 million tonnes, 14.8% more than last season and 3.7% more than last month’s forecast.

Finally, Conab made a downward correction in the projections for wheat, which has just been harvested. The agency now forecasts a harvest of 7.7 million tonnes, from 7.8 million last month. This figure represents an increase over the 2020/21 result of 23.2%, but a drop compared to initial estimates that topped 8.6 million tonnes.

Source: Valor international

https://valorinternational.globo.com/

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Ocean freights remain at record levels in Brazil driven by pandemic

A container ship docked in Santos — Foto: Ana Paula Paiva/Valor
A container ship docked in Santos — Foto: Ana Paula Paiva/Valor

After two years of pandemic, ocean freights remain at record levels in Brazil. On the one hand, the industry believes that prices in the short-term market have peaked and are unlikely to rise further. On the other hand, the persistence of the pandemic still generates a lot of uncertainty and makes forecasts difficult.

In Brazil, the routes most affected by price increases are those of imports from Asia and of exports to the United States. In the last two months, the routes to Europe have also seen sharp growth. The impact, however, is widespread, since the crisis is the result of a global disruption in maritime trade.

Since 2020, cargo transport has been going through a “perfect storm”: staff cuts due to the virus infection; port closures or congestion; and delays in cargo release. All this in the midst of a skyrocketing demand for consumer goods – in many countries fueled by government stimulus. This mismatch has led to a generalized shortage of containers and ships, travel delays and unprecedented price rises.

On the China-Brazil import route, freight rates began to climb as early as the second half of 2020, but it was last year that they reached an all-time high, around $10,000 per TEU (20-foot equivalent units of containers). The price closed 2021 at an average of $9,700 per TEU – an increase of 62% compared to the previous year and 397% higher than in January 2020, according to a survey by the National Confederation of Industry (CNI).

In the case of export routes to the United States, price increases accelerated in the second half of 2021. The freight to the East Coast of North America ended last year at $9,300 per TEU, more than five times the price charged a year ago. In the route to the Gulf Coast of the United States, the price closed 2021 at $7,700, compared with $1,400 in December 2020, CNI said.

These values refer to the short-term market, and do not include prices of bilateral contracts (signed between shipping companies and customers). In this type of agreement, companies that need to transport their products get more stability and protection for moments of price swings. If the entire market is considered, prices drop substantially. For example, in the Asia-Brazil import route, the average freight was $5,794 per TEU in November 2021, according to Logcomex’s calculation.

Prices in the spot market seem to have already peaked “both in exports and imports,” said Luigi Ferrini, senior vice president in Brazil at Hapag-Lloyd, a shipping company. At this moment, groups that are renewing long-term contracts are the ones feeling prices growth. Renegotiations have included price increases seen in 2021.

Andrew Lorimer, executive director at the consulting firm Datamar, believes that there is still room for some price increases. “It could still get a little worse. The main drivers of the crisis today are Chinese supply and U.S. demand, where the problems are likely to persist. In China, we have seen halts because of the omicron variant. And in the U.S., there are still logistical bottlenecks, a huge congestion at the East Coast ports,” he said.

The industry is also already seeing an accommodation of prices, although at a level considered high, said Matheus de Castro, an infrastructure specialist at CNI. “It is challenging to bring a perspective of resumption of normality, due to the behavior of the pandemic. But we are starting to see stabilization, although at prices five, six times higher than before the pandemic.”

Lower consumer spending in Brazil, paradoxically, has contributed to stabilization by helping to balance the supply/demand ratio, said Rafael Dantas, commercial director at the logistics company Asia Shipping. “[Consumer spending] has already peaked. We believe that the volume will fall this year. This is already happening in practice. December was not as heated as 2020, demand is slowing down. So, for us, the situation is almost normal.”

He also highlights, however, the uncertainties brought by the new wave of the pandemic in the world – especially in China, where social distancing measures are more drastic.

Rafael Gehrke, with Logcomex, believes that it will be possible to have a clearer vision about the potential stabilization of prices as of the second quarter, when the effects of the Chinese New Year will be over, at the beginning of February – a holiday that has a great impact on the cargo movement, with an increase in trips before and after the date, when the activities in the country are halted.

“From the second quarter on, other factors may also be clearer, such as the reaction of the local demand in Brazil or a potential increase in interest rates in the U.S., which may slow consumer spending a little,” he said.

Analysts say that it is difficult to predict at which level the freights will stabilize once the scenario calms down. Mr. Castro, with CNI, says that it is difficult to imagine that prices will return to the level seen in the last decade. Mr. Ferrini, with Hapag Lloyd, says that prices are likely to stop at some point between the current level and those seen before the pandemic.

Despite the difficulty of projection, Mr. Lorimer, with Datamar, considers the current prices unsustainable. “A good part of last year’s inflation has to do with the cost of transportation, which impacts everyone. Many products, such as those of lower value, don’t even sustain themselves with such high freight.”

Source: Valor international

https://valorinternational.globo.com/

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Votorantim-CPPIB deal values Cesp at R$9.1bn

Votorantim e canadense CPPIB miram energia solar e podem investir em transmissão - Época Negócios | Empresa

The minority shareholders of Cesp, a São Paulo-based power generating company, managed to improve the conditions of the deal that will merge assets of Votorantim and the Canadian pension fund CPPIB.

Led by Felipe Dutra, from the activist management firm Squadra, the independent committee set by Cesp to negotiate the deal recommended to the board of directors that the power generation utility be valued at R$9.1 billion in the exchange ratio, the equivalent of R$27.93 per unit.

The committee’s recommendation was accepted by Cesp’s board, which approved it on Friday and has just released a notice of material fact about the transaction. With the change, Cesp’s minority shareholders will hold 30.63% of the company resulting from the union of assets. In the original proposal, they would keep 29.9%.

The new evaluation of Cesp implies a 5.9% improvement in comparison to the suggestion made at the end of October by the controlling shareholders. At the time, the power utility was evaluated at R$26.76, with an equity value of R$8.6 billion.=

“According to the math we did last week, considering the internal rate of return to 8%, GSF [Generation Shift Factor], long-term price and reference date [end of 2021], Cesp would be valued at just R$28, which suggests a fair exchange ratio,” said Antonio Junqueira, with Citi, in a preliminary comment sent to asset managers. The analyst also praised the independent committee’s work. “Very good work by the committee. They respected the minority shareholders and really aligned all the variables.”

After the approval of the exchange ratio, Cesp must now call a general meeting of shareholders to consider the matter. As Votorantim and the Canadian pension fund will be able to vote, the deal is virtually approved. The merger is expected to be completed by February.

The creation of the new company, a renewable power giant that will be listed on the exchange B3, is advanced. The first stage has already been concluded, with the union of the electricity assets of VTRM (a joint venture with the Canadians that had control of Cesp and wind power assets) and Votorantim Energia.

In the first stage of the deal, the Canadian pension fund injected R$1.5 billion into VTRM. Votorantim offered the assets of Votorantim Energia, which were valued at R$2.8 billion. Now, the Cesp-VTRM, which will create the new company with a name still undisclosed, remains to be done.

The independent committee also increased the valuation of the assets of Votorantim Energia, to R$2.8 billion from R$ 2.5 billion. With the changes, the power company is born valued at almost R$17.9 billion. The amount considers Cesp’s equity (R$9.1 billion), Votorantim Energia’s assets (R$2.8 billion), those of VTRM (R$4.5 billion) and the Canadian fund’s injection (R$1.5 billion).

Votorantim will hold 37.74% of the new business, while CPPIB will keep 31.94%. The remainder will remain with Cesp’s current minority shareholders, which includes asset management firms such as Squadra (owner of 19.4% of the preferred shares and 12.3% of the total capital) and Truxt.

Source: Valor international

https://valorinternational.globo.com/

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Investment in retail to stabilize, analysts point out

Varejo pós-pandemia: 80% das compras serão feitas em lojas físicas - Mercado&Consumo

The investment scenario for retail this year is likely to remain stable in the face of a possible new slowdown in brick-and-mortar commerce, balanced by the development of ecommerce, say analysts with investment banks and rating agencies consulted by Valor.

Market sources point out that the opening of new stores is related to heated consumption and a fast return on investments, which weighs against short-term expansion movements.

The retail analyst at Banco do Brasil Georgia Jorge says that the explosion of cases of the H3N2 virus and the omicron variant of the coronavirus have led to a deterioration in expectations. “Companies focused on physical commerce will probably remain under more pressure as long as those uncertainties persist,” she says.

According to the analyst, the outlook for the first quarter of 2022 is for “still pressured” sales overall, while pharmaceutical retailers may raise their forecasts amid the influenza and Covid-19 epidemics.

S&P analyst Diogo Ocampo reminds that sales in brick-and-mortar stores in early 2021 were heavily affected due to the pandemic. According to him, demand was not fully shifted to the online operation, which resulted in a drop in sales.

“It was a very difficult year, with falling Ebitda and demand moving to the online channel. All these companies have online channels, but they have lost revenue in this scenario,” he says.

Mr. Ocampo says that the consumption retreat impacted the cash generation of the companies, triggering warnings in relation to the level of indebtedness.

According to Fitch’s CFO Ricardo Carvalho, the macroeconomic uncertainties also impact the level of retail investments because of the dependence on shorter terms of return. The expected, according to the analyst, is that the opening of new stores will slow down in the coming months.

“There is an expectation of lower demand and retailers have to look at what will happen in 2022. They can’t make plans looking at two or three years. If demand doesn’t come, it will be a period of losses. So it’s an investment decision different from than sanitation or railroads,” he says.

Itaú BBA, however, points out that the brick and mortar stores also act as logistical support for ecommerce, which is likely to mitigate the overall more difficult scenario. Retail analyst Helena Villares warns that this does not mean that companies should not revise their estimates downward.

“We already knew it would be a more uncertain macro scenario, with a natural slowdown for retail as a whole. Physical stores are suffering, but there is also the role of ecommerce, to bring inventory together and reduce costs,” she says.

The scenario for more essential segments, such as food, also presents difficulties linked to the macro environment. Fitch says that the performance of companies once boosted during the pandemic has been affected by unemployment and inflation.

“The purchasing power of families today is much lower than it was six months ago. There is a higher level of uncertainty and a weakening trend,” says Mr. Carvalho.

This is also the view of Banco do Brasil, which highlights the resilience of the cash-and-carry due to the lower prices policy.

“Even though food retail has a more essential profile — which does give it some degree of protection — the fact is that food inflation has been weighing heavily on the pockets of Brazilian consumers, reducing their consumption to basic and effectively essential items in the food basket,” says analyst Georgia Jorge.

Considering the lower elasticity of the food market, Itaú BBA highlights that the segment is one of the preferences.

“Retail is likely to suffer —¬ at least in the first half of the year — but the decline in food retail is approaching a limit,” says Ms. Villares.

Another factor expected to continue to weigh against retail securities, according to Itaú BBA, is the movement of investment funds away from the sector.

The analyst says that, due to the high interest rate and the weak performance of Ibovespa, many fund managers have preferred to increase the composition of other sectors in their portfolios.

“In the past, exposure to retail used to be 15% to 25%, but many funds can reach 5% exposure because of this portfolio adjustment,” she explains.

Source: Valor international

https://valorinternational.globo.com/

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Renewable power companies become acquisition targets

Hybrid renewable power plants make a good business case but need clearer legislation to become more widespread | WindEurope

At least four renewable power companies are for sale in Brazil, attracting the interest of groups and asset management companies, including from overseas. The two main assets — Ibitu and Rio Energy — are valued at R$12 billion, according to sources. Other businesses on the block are Renova Energia, which divested projects in 2021 and may sell others in the judicial recovery plan, and EDP Renováveis, with an open strategy of asset rotation.

With the increased global demand for clean energy, renewable companies in Brazil have become the target of interest from international investors. A survey by Itaú BBA, conducted at Valor’s request, shows that 22 deals were closed in the sector last year, with a business value of R$16 billion. For this year, the estimate is to reach R$20 billion.

Part of the recent investments made in the sector came from private equity funds (which buy stakes in companies) that now want to get out of the business. “Project development groups sell assets to recycle capital to invest in other projects,” said Gustavo Miranda, head of investment banking at Santander.

Put up for sale in the middle of last year, Ibitu, controlled by the American asset manager Castlelake, has wind and hydroelectric assets in Ceará, Rio Grande do Norte, Piauí, Santa Catarina, Mato Grosso and Minas Gerais — with more than 877 megawatts (MW) of installed capacity.

The renewable power company originated from the assets of Queiroz Galvão Energia, when the group went into financial crisis amid the now questioned anti-corruption task force Car Wash and put subsidiaries under judicial reorganization. The American private equity fund Castlelake bought the power subsidiary’s debt and took over the business.

With multibillion expansion plans for the business, Castlelake began to be harassed by funds and hired BTG Pactual and Credit Suisse to find an interested party for its assets, valued between $900 million and $1 billion.

Another target is Rio Energy. After giving up on making an IPO last year, the company controlled by U.S.-based private equity firm Denham Capital hired Bank of America (BofA) and Itaú BBA to sell its business, sources familiar with the matter say.

Rio Energy has three operational wind farms totaling nearly 485 MW in installed capacity in Bahia and Ceará, besides two wind farms in Bahia and one in Ceará expected to start in 2022. This is not the first time the company has negotiated the sale of its business. After dropping out of the IPO, the company is once again looking for a buyer. The assets are valued at around R$6 billion.

Another company that may sell assets in 2022 is Renova Energia. In judicial reorganization since 2020, the company sold Brasil PCH for R$1.1 billion and its stake in the Serra da Prata Hydroelectric Complex to settle part of its debt in the market. The power generating company still has a debt of around R$2 billion and is expected to continue divesting assets.

The Alto Sertão III wind farm, in Bahia, will remain with the company. However, the company still has 16 projects in development with leasing contracts, and 12 of these areas already have a previous environmental permit for the development of wind farms, which makes these areas eligible. The areas are located in Bahia, Paraíba, Pernambuco and Piauí, and have a generation potential of around 3.62 GW. The company is studying which one will be sold.

One of the main countries drawing investments in this segment, Brazil is on the radar of investors, since it has natural resources, lower costs and stable regulation. Furthermore, excluding the Unite States and Europe, funds from around the world do not find large platforms for investments in this sector.

“Brazil combines a large market and regulatory stability for renewable power generation,” said Alexandre Viana, a partner and head of consulting at Thymos. A practical example of this is that Brazil is once again on EDP’s radar. Last year, EDP Brasil acquired 100% of AES Inova and made partnerships in the viability of large-scale solar plants. CEO João Marques da Cruz often says that the company’s strategy involves the sale of operational assets to finance new investments.

The generation arm, EDP Renováveis, has Brazil in its 2021-2025 horizon. With global installed capacity of more than 12.6 GW, the goal is to reach 20 GW of capacity by 2025. The devaluation of the Brazilian currency is another point that made the assets cheaper and may draw the attention of international players. The already weakened real can fall even more and some analysts say the foreign exchange rate may reach R$6 to the dollar this quarter. The company put up for sale a hydroelectric plant in Espírito Santo and two others in Amapá. Pipeline, Valor’s business website, first reported last year that the assets of EDP, Ibitu and Rio Energy were put up for sale.

Consultants heard by Valor believe that wind and solar will remain as leaders of this business in 2022, because these sources are the pillar of growth in terms of profitability, scale and consolidated industry.

In addition, the ESG agenda linked to these sources and the learning curve that has cheapened the price of megawatt-hours has drawn the attention of players who want to diversify their operations, from companies seeking long-term risk management to oil companies.

The privatization drive has not progressed as the government says it wanted, but the Brazilian Development Bank (BNDES) announced that the stock offering of the state-owned company will be launched in mid-March. After that, the federal government will no longer hold 72.33% of the voting capital and will be diluted in the total capital of the company. The expectation is that the government’s stake will fall to 45% and that it will no longer be the majority shareholder in the power company. That situation would likely draw investors, from individuals to corporations.

Mr. Viana, with Thymos, added that the opening of the free energy market, a segment in which companies with high energy demand can negotiate directly with generation companies and traders, will probably drive mergers and acquisitions in Brazil. The BNDES and the Banco do Nordeste (BNB), major players that finance expansion projects in the electricity sector, want to develop projects in the free market and in renewable power.

Other operations have been going on since 2021 and are likely to materialize this year. One is the merger between the energy assets of Votorantim Energia and the Canadian pension fund CPPI, which is expected to create one of the largest energy groups, Nova VTRM, valued at R$15 billion and owner of a number of renewable generation assets and control of Cesp. The company received an investment of R$1.5 billion from CPPI for expansion that can be done in greenfield and acquisitions.

Denham Capital, EDP Renováveis, Ibitu, Renova and Rio Energy declined to comment. Castlelake did not immediately reply to a request for comment.

Source: Valor international

https://valorinternational.globo.com/

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Companies unite for racial justice agenda

CEOs and senior executives of 47 companies from various segments have united with the goal of training 3 million afro-descendant professionals for the Brazilian market and taking 10,000 of them to leadership positions by 2030. The Movement for Racial Equity (Mover) started to be formed in 2020 and has the goal to accelerate racial inclusion and also fight structural racism within companies as well.

This year, the group is going to start investing R$15 million in training and employment public notices. Among the participating companies are giants such as Mondelez, Coca-Cola, Gerdau, BRF, Ambev, Carrefour, UnitedHealth, Via, XP and Heineken.

Liel Miranda, CEO of Mondelez in Brazil and also Mover’s president, believes it is possible to obtain the desired results because the movement has clear goals, a strategic plan set up with the support of organizations and institutions that fight for racial equality, and an annual budget of R$15 million, considering initially a three-year investment cycle.

The amount was raised among the members, which, in addition to signing a commitment to work for racial inclusion inside and outside their companies, also need to contribute with a minority (R$250,000) or majority (R$500,000) quota, says Mover´s CFO Marina Peixoto. In 2022, part of this budget will begin to be allocated in public notices for training and employment, aimed at black people and organizations, with the support of the Baobá Fund.

Among the 47 CEOs Ms. Peixoto is talking to in pursuit of achieving Mover’s goals, three declare themselves black or mixed race: Edvaldo Vieira, CEO of Amil – UnitedHealth Group, Mauricio Barros, CEO of DHL, and Eduardo Santos, 34-year-old executive leading the Brazilian operation of the Swiss language school EF Education First, owner of the English Live platform.

Last year, Mr. Santos learned about Mover through Liel Miranda, who called him: “Edu, for us to develop 10,000 professionals for leadership positions, having English is fundamental”. Mr. Santos joined the group and says that he is now studying how the courses offered by his company can be included in the training in which Mover will invest.

In the strategic agenda outlined by Ms. Peixoto with Mr. Miranda, Mr. Santos and the other CEOs, although 80% of the budget is allocated to public notices and training organizations, it is defined that member companies need to do their homework with their own resources.

“It’s no use creating a multi-million fund for the community, if at home these companies do not have representation and consistency in racial equality policies,” says Ms. Peixoto. One of the first challenges that Mover faced during its structuring in 2021, says the executive, was finding that a large part of the members did not have a finalized demographic census — which prevented the group from obtaining an accurate picture of how many black people it had in its total workforce and in which positions there were gaps in representation.

“Companies are at very different stages of maturity, in terms of racial issues. We made it a priority for them to carry out this census now in 2022 and we set the goals based on preliminary data, the members’ turnover numbers and the Ethos Institute survey,” she says. Although the country’s population is made up of 56% of black people, they make up only 35% of the workforce in companies, according to the latest survey by Ethos.

Associates also committed to creating more inclusive recruitment, and in 2021 participated in events targeted at black talents, where they made available a total of 800 jobs — from trainees and up, mostly in management positions. Creating a more inclusive selection and environment also depends on awareness and companies will intensify racial literacy, says Ms. Peixoto. Last year, 200 Mover volunteers were trained by the Instituto Identidades do Brasil (ID_BR).

Liel Miranda, with Mondelez, also defends that this agenda should not only belong to CEOs and that it needs to include the entire workforce. He cites a live transmission promoted by Mover in November, about racial literacy, and aimed at more than one million employees.

At home, Mr. Miranda says that Mondelez redirected its internship program and filled 80% of its positions with black and mixed race people. “But we need to go even further, not stop at entry positions. Therefore, we have the goal of having 34% of black and mixed race people in administrative and leadership positions by 2024.” Currently, Mondelez has approximately 37% black employees, with 24% of them in administrative positions.

Source: Valor international

https://valorinternational.globo.com/

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Analysis: XP’s acquisition of Modal can be a masterstroke

Em troca de ações, XP compra 100% do Banco Modal por R$ 3 bilhões

The acquisition of Banco Modal by XP Inc. brings to the financial group founded by Guilherme Benchimol R$30.4 billion in assets under custody, 501,400 active clients and a portfolio line of credit of R$606.8 million, data from the third-quarter results show. It may seem little for XP, which was already near R$800 billion under its umbrella, with 3.3 million active clients and R$8.6 billion in collateralized credit operations. But far from being a negligible step in the consolidation of the investment market in Brazil, XP’s bid can be considered a masterstroke.

With the countless agreements closed by Modal, such as the sale of up to 35% of its capital to Credit Suisse in mid-2020, the digital bank was one competitor with the potential to cause problems to XP. In the premium segment, which serves customers with at least R$300,000 in assets, Modal had been offering asset allocation with the Credit Suisse brand. Modal’s mobile application made available 28 exclusive funds from the Swiss group’s private banking in Brazil and the plan was to reach 40 in the first quarter of 2022.

In a meeting with investors in mid-December, Modal CEO Cristiano Ayres said that more than just a pretty name, the presence of Credit Suisse was the way to offer financial advice similar to what is done with large fortunes. The relationship with the Swiss group also paved the way for Modal to take part in the syndicate of banks in capital market operations and distribute assets originated by the firm to its retail base.

The foreign partner’s seal of approval also helps draw independent and professional brokerage firms to the platform, Mr. Ayres said. Modal had been moving forward in this distribution channel since the acquisition of the research company Eleven, which already had relationships with several asset management firms, including competitors.

Another front in which Modal had been investing was in the so-called “B2B2C,” in which it offered financial services to various partners. It already had agreements with companies such as Rappi, Dotz and Conta Black.

Acquisitions made by Modal to create an “ecosystem of financial well-being” are also in line with the businesses where XP demarcated its territory, including financial education and training of professionals, whether in investments or technology.

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Prudential evaluates opportunities in new Latin American companies

A Prudential

The American insurance company Prudential has its eye on new companies in Latin America and Brazil. Through PruVen Capital, a venture capital asset manager created in late 2020, it has been evaluating businesses linked to innovation in the areas of insurance, asset management, healthcare, financial services, and technology.

With expected investments between $5 million and $10 million, PruVen is currently analyzing three startups in the region. The targets are operations able to catalyze changes within the group itself and that are “more or less consolidated for series A investments,” says Erick Kluft, head of strategy and risk at Prudential Financial in Brazil.

“We look for companies that, besides financial return, have some synergy with the group, that can contribute to growth, whether in products, distribution, new methods or operational control processes,” says Mr. Kluft. The idea is to have no more than a 30% stake in businesses that have already been tested in some way and have the potential to become “iconic”.

Prudential started to target businesses complementary to its core activity, with the intention to orbit in the world of innovation, in 2019, when the group’s leadership changed. It attracted as a founding partner to PruVen Ramneek Gupta, one of Robinhood’s angel investors, and who was for nearly a decade head of venture capital investments at Citi globally.

“We are very focused on services for small and medium-sized enterprises, especially insurance brokers. We believe that with more than 8 million such firms, growing at a rate of 660,000 new companies per year, there is a powerful opportunity to help those companies grow and manage their business with technology and tools typically available today only to the big guys,” says Mr. Gupta. “Couple that with the highly complex regulatory environment that small businesses face in Brazil and you have the ingredients for a substantial market opportunity.”

Mr. Kluft says that by the very nature of Prudential Financial’s business, the high interest rates in Brazil is unlikely to hinder investments in startups with proprietary capital. “The company has existed for almost 150 years,” he says. “It doesn’t think in the short term. Our work is to deal with life. I take care of my client from the first moment, when he needs a life insurance, until when he passes away, I’m there to close the cycle with his family.”

In Brazil, Prudential has been in business for more than two decades and is one of the leaders in the life insurance ranking. The group is present in over 40 countries and has $1.7 trillion in assets under management and over $4 trillion in capital insured.

Source: Valor international

https://valorinternational.globo.com/

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