Facial recognition system allows customers to pay in stores without using an electronic device or a card
08/26/2022
Eladio Isoppo — Foto: Nilani Goettems/Valor
When making a purchase, consumers want to avoid queues or time-consuming bureaucracy. To solve this, startup Payface brought to the market a new means of payment that simplifies operations in retail.
The solution uses facial biometrics technology and connects the entire ecosystem of payment methods, including credit cards, private label credit cards, wallets, acquirers and sub-acquirers. Users are not required to use any device or card. Payments are approved through face recognition – it takes a simple glance at the device installed at the cashier.
Payface’s first client was São Paulo-based supermarket St Marche, which saw broad acceptance since the innovation was put in place three months ago. “We are in 500 points of sale in six states,” said Eládio Isoppo, the fintech’s CEO and co-founder. The list of clients include supermarkets Zona Sul (Rio de Janeiro), D’ Ville (Uberlândia, Minas Gerais), Frade (Ilhabela, São Paulo), and Muffato (Paraná). The solution is also in use in Santa Catarina and Bahia.
Customers like it because operations are instantaneous and do not require point-of-sale terminals, cards, or intermediaries. “The consumer can go for a walk and stop at the supermarket to shop, without having to present any document, card, or cell phone,” Mr. Isoppo said. Payface’s next move is to expand to pharmacy chains and smaller stores. To do so, it is seeking partnerships with issuing and acquiring banks to reach small and medium retailers.
The security of the new payment method is in the technology behind the solution, Mr. Isoppo said. Payface holds a PCI Compliance certificate, which attests that the company follows the necessary security rules in processing card data. The consumer’s registration on the Payface platform gathers data such as the tax ID, payment method, and facial biometrics, and is integrated with the software installed in the retail chain. The insertion of the means of payment uses tokenization (the process of replacing real data with equivalent data, with the same format and protected by cryptography).
The development of technologies to reduce reliance on passwords and improve the experience by eliminating friction in data validation has advanced. The process, called passwordless authentication, is also being adopted by the financial system.
A survey by consultancy Netbr, conducted with the support of its global partner Ping Identity, showed that 77% of the lenders already execute – or are about to do so – some kind of passwordless electronic operation. “We are talking about the same standards used by big techs, now being adopted by the financial industry,” said André Facciolli, CEO of Netbr. According to him, four of the six largest Brazilian banks use the technology in authentication and authorization processes.
Another advance was the use of benefits for employees, such as food and meal vouchers. Bee Vale’s application, with multiple wallets, allows contactless payments by mobile phones. Daniel Oliveira, CEO of paySmart, a fintech that processes payments for companies and has Bee Vale as a client, said that the near field communication (NFC) technology is present in most cell phones and is an option for electronic payments.
Group with interests in heavy construction equipment, luxury carsexpects to reach R$2.2bn in revenues this year
08/26/2022
Clemente Faria Junior — Foto: Maria Tereza Correia/Valor
Bamaq, a group with interests in heavy construction equipment, luxury cars, financing, and car insurance, plans to invest R$700 million by 2025 to expand current businesses and enter new services. The group ended 2021 with revenues of R$1.6 billion and expects to reach R$2.2 billion this year, up 37.5%. The expected profit for this year is R$108 million.
The largest investment will be made in a new business focused on leasing of heavy equipment (such as backhoe loaders and motor graders), trucks, and utility vehicles for construction. The group represents the brands Iveco, New Holland Construction, FPT Powertrain Technologies, and Continental in 14 states.
The group will also invest in opening a fintech, expanding a new tire sales business, opening new heavy equipment and luxury car dealerships, expanding a remote equipment management service, and expanding insurance services.
The CEO of the Bamaq Group, Clemente Faria Junior, said that by 2023 an investment of R$134 million will be made with own funds in the structuring of the heavy equipment and truck rental business. “From the second year of operation on, the intention is to finance half of the amount to be invested,” he said. The executive’s forecast is to make investments of R$160 million in 2024 and R$204 million in 2025, totaling R$498 million in three years. Mr. Faria added that most funds will be invested in the acquisition of a fleet for rental.
“Customers used to want to buy heavy equipment, but today there is growing demand for the use as a service model,” the executive said. He noted that the heavy machinery sales business now has 40,000 customers. For each heavy machine purchased, the same customer uses, on average, three trucks on the construction sites. And a portion of customers do not have funds available to acquire the entire fleet but are interested in the rental model.
Mr. Faria said that even the demand for the purchase of heavy equipment in Brazil is heated, mainly because of the demand from large agribusiness producers located in the region known as Matopiba — named after the four bordering states of Maranhão, Tocantins, Piauí, and Bahia. “Agribusiness accounts for 30% of our sales,” the CEO said. Besides equipment sales, the group sells auto parts, tires, and lubricants. It also does equipment maintenance and remote fleet management.
The area of heavy machinery and trucks operates today with 14 business units and revenues of R$672 million in 2021. This year, Bamaq foresees the opening of Iveco and New Holland Construction units, two of them in Marabá (Pará), one in Sinop (Mato Grosso) and one in Luís Eduardo Magalhães (Bahia).
Another bet in the heavy machinery area is the sale of Koneq, a remote telemetry service that allows the remote management of equipment. The service controls engine temperature, the hydraulic system, fuel level, machines in operation, and the electric fence. Currently, there are 940 pieces of heavy equipment in the field in the country monitored by this system. The goal, according to Mr. Faria, is to reach 3,000 systems installed within 12 months. Bamaq invested R$5 million to develop the technology and will invest more R$5 million in 2023 in the service.
In the area of luxury cars, which accounts for 25% of the group’s revenue, there are plans to open a Porsche store in Salvador this year. Bamaq is also investing in the expansion of the consortium for luxury vehicles. The group has Mercedes-Benz and Porsche dealerships and represents both brands in Minas Gerais. “We have just been appointed to represent Porsche in Bahia. The store in Salvador, expected to be opened in the fourth quarter, will be the first in the state,” said Mr. Faria.
The CEO said that vehicle sales grew 22% in the 12 months through June. “Today we have 1,200 people waiting in line for a Porsche, 400 waiting for a Mercedes-Benz, and 550 waiting for the delivery of heavy equipment,” said Mr. Faria. According to the executive, industries face difficulties to meet the heated demand of consumers in the post-pandemic due to lack of parts.
In this scenario, the group sees as an alternative to help control customer anxiety a successful Brazilian institution, the so-called “consórcio”. It’s a kind of buyer’s club, a purchasing pool through which a group of people pays monthly installments on a certain item, such as a car or a house so that every month the group can afford to buy one. In 2021, said Mr. Faria, the “consórcio” business grew 180% compared to the quotas sold. The volume of commercialized credits grew 89% and the portfolio increased 82%, surpassing 20,000 active clients.
Another bet of Bamaq is in the financial industry. The group has filed a request with the Central Bank to open a fintech, which will offer financial products and services by digital means, including vehicle and heavy equipment financing, loans, credit cards, and acquisition of receivables. The fintech will be composed of a direct credit company (SCD) and a credit rights investment fund (FIDC). The portfolio is expected to reach R$100 million in the first year, R$500 million in the second year and R$1.7 billion in five years.
Bamaq was founded in 1974 by Clemente Faria, grandson of the banker who founded Banco da Lavoura, in 1925, also named Clemente Faria. In 1971, his sons Gilberto and Aloísio Faria split Banco da Lavoura into Banco Bandeirantes and Banco Real, which were later sold to Caixa Geral de Depósitos (today Itaú-Unibanco), and ABN (today Santander). In 1974, the banker’s grandson, Clemente Faria, founded Bamaq, which started as a Fiatallis dealership (today New Holland Construction). The group operates in 16 states in the Northeast, North, Central-West, and Minas Gerais, employs 770 people, and has just over 70,000 active customers.
Bank seeks to double its 3 million-user base and multiply its portfolio by four in five years
08/26/2022
Octavio de Lazari Junior — Foto: Leo Pinheiro/Valor
Bradesco has announced the acquisition of Ictineo Plataforma, a popular financial institution (sofipo) that operates with individuals in Mexico, strengthening its first and only international retail operation. The deal will give access to regulatory authorization to distribute new products in the country.
The bank has been operating for 12 years in the Mexican market and has about 3 million clients of white label and branded cards. The acquisition was made through subsidiary Bradescard México.
The goal is to, at least, double this user base and multiply the portfolio by four in five years — although the bank does not reveal how large the portfolio is now. The value of the transaction was not disclosed.
According to Bradesco, Bradescard México is one of the leading consumer finance companies in the retail chain segment but does not have a license to work in other financial business fronts because it operates as a limited liability company in Mexico.
“The acquisition of the Ictineo Plataforma institution will open a new financial business front for us with high growth potential in Mexico, a country with several attributes, such as being the second largest GDP in Latin America,” Bradesco CEO Octavio de Lazari Junior said in a statement. “We will have the possibility of expanding our operations to be similar to a digital bank to gain a more robust presence in a relevant market such as the Mexican one,” he adds.
Recently, Mr. Lazari had already suggested that he intended to expand the operation in Mexico, which has a market similar to the Brazilian one. He even said that the movement could include the creation of a digital bank, stating that it could take one of the brands used here in Brazil there: “There is no digital bank called Digio in Mexico,” he said.
Alexandre Monteiro, head of Bradescard México, said that the goal with the purchase of Ictineo is to focus on a digital strategy. “The first step will be to offer digital accounts, payroll-deduction loans, and investment accounts,” he said in the note. “It is a relevant move to consolidate Bradescard in the Mexican financial market.”
Bradescard México has plans to carry out the distribution of other products, such as car financing and housing credit. In the credit card segment, in five years Bradescard intends to be among the largest card issuers in Mexico, expanding the number of trade agreements with new retailers and strengthening the digital distribution channel with important investments in technology.
Ictineo has a portfolio of only about R$4 million and less than 3,000 clients. That is, Bradesco is basically buying the license. The bank has no branches there and does not intend to have any. The idea is to strengthen distribution in the stores of partner retailers — one of the most important is Walmart’s chain Bodega Aurrerá — and invest heavily in digital channels, which will include a marketing campaign. For now, the name of the digital bank is likely to be Bradescard, but a change in the future is possible. There could even be an agreement to use the Digio brand, or another Bradesco digital initiative, but this has not been decided yet.
In the cards’ operation, with a focus on low-income clients, Bradescard has a significant market share, close to 24%, and competes with names such as Coppel and Azteca. By creating a digital bank, it will compete with the operations of the large traditional banks and also with new entrants such as Nubank and Rappicard, a partnership between the delivery app Rappi and Banorte.
“We have an important banking role. We are the first card for many of our users. We’re going to maintain that focus, but also increase the number of products and have a broader relationship with our clients. We are going to move up a little from the base of the pyramid and compete with Nubank, which, in my view, targets a slightly more middle-class audience,” the executive said.
Mr. Monteiro points out that another positive aspect brought by the new license has to do with funding. Until then, the card operation was basically financed by accrued profits. Now Bradescard will be able to capture deposits. According to him, the popular financial society license (sofipo) meets all the bank’s needs and there is no plan, at least for the time being, to seek a bank license.
The conclusion of the deal is subject to approval by the authorities in Mexico (Comisión Nacional Bancaria y de Valores, CNBV) and Brazil (Central Bank).
Payments in arrears surged in Brazil amid a widespread deterioration in income and rising inflation
08/26/2022
Economists do not believe retailers are at risk and see the current situation as very different from that of the late 90s thanks to better internal controls and available cash — Foto: Ana Paula Paiva/Valor
Brazil’s large retailers increased projections of loss from defaults as payments in arrears surged amid a widespread deterioration in income and rising inflation.
The 10 largest public companies in the industry set aside R$7.79 billion in provisions for bad debts between January and June, up 22% from the end of 2021, and also 42.2% above the first half of 2021. The figure is as high as last year’s sales of Leroy Merlin and Riachuelo.
The weight of the provisions for bad loans in relation to the companies’ net revenue rose to 4.92% this year from 4% in the first half of 2021. In December, it was 3.9%, which means that the ratio was stable until this curve started to grow this year.
Economists do not believe retailers are at risk and see the current situation as very different from that of the late 90s thanks to better internal controls and available cash. They also see small and medium-sized retailers, those off the radar of the market, as companies more exposed to such an effect.
The provisions for bad loans work are deducted from an asset account because it affects the accounts receivables, and also has a direct effect on the cash flow and the net result of the retailer. This is because, in accounting, it is considered a commercial expense. When the retailer considers that it will not receive a certain amount, it provisions this loss, and follows its own criteria for this, but tries to collect the money. A debt that is more than 180 days delinquent enters the “default” stage and is already considered a loss.
Retailers also reported more new losses than loans in arrears being paid. This is a changing line in financial statements because of constant inflows and outflows of funds. From January to June, the 10 companies expanded provisions by R$1.59 billion, but R$1.1 billion left this pool in the same period.
According to a former chief financial officer of an electronics retailer, the increase in loss additions reflects the scenario of lower real income and difficulty in renegotiating with customers. “Many times, the retailer renegotiates the debt with the customer, and the agreed value is already accounted as 100% recovered. This eases the provision, but is a questionable practice since the retailer will still receive the payments in the future. Even this renegotiation, which helps in the recovery, may be difficult,” the source said.
Pressure from new losses is mounting as retailers need to increase credit granting to encourage sales because electronics sales are growing slowly and fashion retailers need to consolidate recovery. In order to curb the increase in payments in arrears, however, the companies have been reviewing their policies for buy now, pay later options, and store credit cards.
“They face a dilemma. Retailers are forced to offer more lines of credit, despite very high interest rates [up to 8% a month], as they have to set aside even more money for payments in arrears,” said Claudio Felisoni, a professor at the University of São Paulo (USP) and head of the institute of retail executives (Ibevar). “There is only one solution: betting on data, on profile analysis tools, to sell more to good payers,” he said.
Fashion retailer Marisa is among those that started to make some moves and has been more rigorous in granting credit since late 2021, while rival Renner has reduced limits for purchases by higher-risk customers and expanded debt collection offices since March. “The more challenging credit and default backdrop hit the industry across the board, and we reacted to that. We already have now better quality [in the portfolio],” Renner CEO Fabio Faccio said in a conference call weeks ago. The retailer reported R$821 million in credit losses up to June, 40% above December.
An analysis by Valor shows that retailers are calculating more losses linkedto payments in arrears — Foto: Valor
The problem is also seen in food retail, a segment that typically faces fewer delays due to the client’s need to use credit lines for purchases of staples. Carrefour reported a rate of nonperforming loans – those 90 days in arrears – of 13.2% in the January-June period, compared with 8.1% a year earlier. The company has restricted credit granting since December. “We are working on it, and although this rate is still growing, we saw a lower expansion rate in the default rate since March,” Chief Financial Officer David Murciano told Valor in July.
Central Bank data show that the default rate in the credit portfolio for goods was at 3.42% in April 2021, then rose to 4% in December. Four months later, it was already at 4.71%, according to the latest data available.
Another interesting piece of data in the financial statements is the profile of payments in arrears. The percentage of debts less than 90 days in arrears grew. These are the new debtors, who had been paying on time until the first months of 2022 but stopped doing so from March on.
In December, this group represented on average 53.5% of total nonperforming loans and increased to 56.6% in June. Old debtors, with loans more than 90 days in arrears, accounted for the remaining percentage.
According to the former chief financial officer heard, this entry of new payments in arrears occurred because the companies “opened the tap for credit” last year to stimulate demand. “Now, they are closing it again, because they felt the delays, but that’s the way it is. It’s about continuously adjusting credit-granting policies. We are talking about large companies with better criteria and controls, so it is a temporary situation,” he said.
Since these are forecasts, each retailer can project in a more or less conservative way how much loss they expect. Therefore, retailers do not always change this at the same time, as is the case now. This time, the prevailing assessment is that the worsening of the macroeconomic scenario forced them to set aside more money for losses.
“Default rates are not growing because of uncontrolled spending or accelerated consumption. Instead, it reflects the resilience of inflation,” said Fabio Bentes, an economist at the national trade confederation (CNC). “We have even seen prices deflate recently, but inflation is still high. That’s why we believe that this increase in provisions is here to stay for a while, despite the increase in Auxílio Brasil, because we saw a deep deterioration in income and inflation will slow down gradually,” he added, citing Brazil’s main federal social program, which is now giving higher handouts for more people.
Analysts with banks like XP expect that this greater pressure will gradually ease next year. Marisa, Riachuelo, and Renner believe that default rates will improve in the third and fourth quarters, especially after September. The retailers also pointed out that, since there was a drop in provisions a year ago, the basis of comparison is low. According to the companies’ financial statements, companies focused on electronics – both through websites and brick-and-mortar stores – and fashion retailers increased their provisions the most as they are highly dependent on buy now, pay later options.
In its 11th edition, the Brazil Justice Yearbook describes the role of the Judiciary Power amid the grave crisis raging among the powers. Based on the 80 million lawsuits under way in the country’s courts and tribunals, the publication clearly shows that it is to the courts that the people turn to when they wish to ensure their rights. The Yearbook it is the English version of the Anuário da Justiça Brasil.
The reader will find on the pages of this Yearbook a selection of the rulings of the Supreme Court and higher courts that have defined the course of the country and the case law on the most controversial and recurring topics in court.
In addition to the profiles of the justices heading the Judiciary Power, this edition also brings, for the first time, the voting tendencies of each judge in the main legal areas — if they lean more towards the legalistic or guaranteeist point of view in the criminal sphere, the tax authorities or the taxpayer on tax issues or vote more in favor of the consumer or the worker. This is essential information for those who follow the daily routine of the Brazilian courts.
The 2022 Brazil Justice Yearbookalso offers data on the productivity of each court and its members: the number of cases assigned, judged, and in backlog.
A special report features the changes in the case law of Carf (the Administrative Tax Appeals Court) after the end of the tiebreaker vote, and includes the profile of the new Chief Justice Carlos Henrique Oliveira, and the members of the council’s Superior Chamber.
The reader will also learn more about the members of the National Justice Council, the National Council of Prosecution Services, the Brazilian Bar Association, the Brazilian antitrust authority (Cade), and the Federal Audit Court.
Advertisers of this edition Arruda Alvim & Thereza Alvim Advocacia e Consultoria Jurídica Associação Educacional Nove de Julho – Uninove Ayres Britto Consultoria Jurídica e Advocacia Conselho Federal da Ordem dos Advogados do Brasil Dannemann Siemsen Advogados Décio Freire Advogados JBS S.A Machado Meyer Advogados Refit Sergio Bermudes Advogados
80.000.000 de motivos ConJur lança nova edição do Brazil Justice Yearbook Em sua 11ª edição, oBrazil Justice Yearbook mostra o protagonismo do Poder Judiciário em meio à grave crise entre os poderes. Diante de 80 milhões de processos em tramitação nas varas e tribunais do país, a publicação deixa claro: é à Justiça que a população recorre para garantir seus direitos.
Nas páginas do Yearbook, o leitor encontra uma seleção das decisões do Supremo Tribunal Federal e dos tribunais superiores que definiram os rumos do país e da jurisprudência nos temas mais controversos e recorrentes na Justiça.
Além do perfil dos ministros da cúpula do Poder Judiciário, novidade desta edição é a tendência de voto de cada um deles nas principais áreas do Direito: se mais legalista ou garantista na esfera penal, se mais favorável ao fisco ou ao contribuinte nos temas tributários, se tende a decidir a favor do consumidor ou do trabalhador. Informação fundamental para quem acompanha o cotidiano da Justiça brasileira.
O2022Brazil Justice Yearbookapresenta ainda dados da produtividade de cada tribunal e de seus integrantes: a quantidade de processos distribuídos, julgados e em acervo.
Reportagem especial trata das mudanças na jurisprudência do Carf (Conselho Administrativo de Recursos Fiscais) com o fim do voto de qualidade e traz o perfil do novo presidente, Carlos Henrique Oliveira, e dos conselheiros que integram a Câmara Superior do conselho.
Conheça também os integrantes do Conselho Nacional de Justiça, do Conselho Nacional do Ministério Público, da Ordem dos Advogados do Brasil, do Conselho Administrativo de Defesa Econômica (Cade), do Tribunal de Contas da União.
A versão digital do 2022 Brazil Justice Yearbook é gratuita e está disponível no site anuario.conjur.com.br e por meio do app Anuário da Justiça. A versão impressa está à venda exclusivamente na Livraria ConJur.
Anunciantes desta edição Arruda Alvim & Thereza Alvim Advocacia e Consultoria Jurídica Associação Educacional Nove de Julho – Uninove Ayres Britto Consultoria Jurídica e Advocacia Conselho Federal da Ordem dos Advogados do Brasil Dannemann Siemsen Advogados Décio Freire Advogados JBS S.A Machado Meyer Advogados Refit Sergio Bermudes Advogados PlayvolumeAd3
New company is born with R$41bn and will have a compensation formula to draw, retain talents
08/25/2022
Roberto Paris — Foto: Ana Paula Paiva/Valor
The creation of a new asset management company by Bradesco together with the assets that came from BV DTVM aims at building a structure similar to that of independent assets and wealth management firms. This means having a corporate model capable of attracting and retaining professionals, in addition to assessing possible acquisition opportunities, especially in the universe of alternative funds, said Roberto Paris, Bradesco’s managing director.
The deal complements a niche in which Bradesco’s asset management business did not operate directly, and makes this core of private banking originated from the BV base gain an appearance of wealth management, in which banks do not need to hold custody of assets, said José Alberto Salvini, CEO of BV. “It has to do with the partnership structure, to make things easy, aligned with the interests of investors, portfolio managers, and with more agility in offering more complex alternative products that require specific approvals, which can sometimes take longer in a conservative structure,” Mr. Paris said.
According to him, the investment industry in Brazil has undergone profound changes and, along the way, many specialized assets of several types have emerged. BV Asset has participation, development, and real estate funds. “Bradesco even provides clients with third-party [alternative] products, but it didn’t participate directly in this market,” Mr. Paris said.
The asset management company, with no name yet, is born with R$41.7 billion under its umbrella, and R$22 billion in private banking custody. The idea is that the new brand will not refer to any of the groups to which it will be linked and will even operate at different addresses of the two banks. At the end of July, BV ranked 24th in Anbima’s ranking of asset managers. It had R$12.9 billion in private-equity funds, including wealth management funds and investment organizations. The firm’s real estate funds have R$6.1 billion, and there are more R$8 billion in hedge funds. Fixed income, the large base of Bradesco Asset Management (Bram), totaled only R$11.3 billion.
According to the agreement, Bradesco will hold 51% of BV DTVM’s capital, will have a majority of representatives on the board and the members will choose jointly who will be the executive leadership of the operation. Currently, the asset management company and BV’s private bank are institutionally represented by Luiz Sedrani, the firm’s chief investment officer. The value of the deal was not disclosed.
Mr. Salvini, with BV, said that the partnership with Bradesco makes perfect sense because the portfolios complement each other. On top of that, having access to a giant distribution channel, such as Bradesco’s, is an advantage, as well as other possibilities that arise from the partnership. “Our private banking model is likely to improve a lot. Bradesco offers products that we don’t have, they have BAC in Florida [which props up Bradesco’s platform in the U.S.], and our clients will be able to use this channel,” he says.
According to him, if BV DTVM had partnered with BB Asset, from Banco do Brasil, of which BV is a partner, this would not bring so much difference in the supply of products. In addition, as the asset management firm is controlled by a state-run bank (Banco do Brasil), it would face more difficulties in hiring professionals in an industry in which the compensation model is tied to the performance of the funds.
BV is focused on retail, and the executive realized that if he wanted to do something different, he would need to find a strategic partner. “We didn’t even get to talk to other players, the match with Bradesco was complete.”
Today, BV DTVM is connected to the main investment platforms, although with a small presence in some. The association with Bradesco does not change this performance. The offer to private-banking clients is likely to include investment consolidation services, access to other applications, and an online trading platform, in addition to estate and succession planning.
As for the products offered, the BV DTVM’s executive acknowledged that the company is known for its structured funds but says that it does not intend to be limited to that. “We will also have liquid funds, with very specialized people.” Considering the custody part, BV DTVM has almost 150 employees. Mr. Salvini says the private-banking team is being expanded, but that the staff does not need to grow that much in the coming years.
In its history of consolidation, Bradesco has always preferred complete acquisitions, but this design is not defined at the start of the deal with BV. “At the first moment, it is a partnership, that’s what you have, and it is expected to continue for a long time. As time goes by, everything can be evaluated, but the goal is to keep this structure to serve the client and consolidate itself as an independent reference asset management company,” says Mr. Paris. Mr. Salvini said that it is not in BV partners’ plans sell the entire operation.
This year, Bradesco took over BNP Paribas’ wealth management portfolio in Brazil and had already made a similar move with J.P. Morgan’s private equity structure. “The strategies are ultimately aimed at strengthening services to high-income clients,” Mr. Paris says. In 2015, one highlight of the acquisition of HSBC was the high-net-worth client base the English group had in Brazil. Bradesco gathered then R$100 billion in private banking and about 15% of that came from HSBC. Currently, Bradesco has R$380 billion in private banking and R$544 billion in asset management.
Survey shows imports may enable capital expenditure of R$35bn in projects
08/25/2022
Industry foresees a “race for the sun” this year, as consumers are expected to join now to use the grid free of charge by 2045 — Foto: Pixabay
Imports of solar equipment to supply the markets of distributed generation (own generation) and centralized generation (large-scale farms) have risen 100% year-over-year in the first half of 2022, a survey with 1,600 companies linked to the sector found.
This can enable capital expenditure of R$35 billion in the entire project cycle and represents an installed capacity of nearly 10 gigawatts-peak. The data was released by Greener, a consulting company specializing in studies about the solar power market, during the event Intersolar South America.
“We had a strong acceleration in volumes in the first half of the year, with more than 100% growth in equipment arriving in Brazil, especially photovoltaic modules, which indicates an investment of more than R$35 billion. Distributed generation is the main driver of this growth,” Marcio Takata, a director at Greener, told Valor.
The study also found a slight decrease in prices. The previous survey pointed to an 8% increase in solar panel prices due to freight costs, commodity prices and exchange rates.
Now the prices of photovoltaic systems have cooled by 4.3% for the final consumer due to cheaper freight costs, the stronger real, growing competition in the domestic market and the larger number of equipment distribution companies as a result of the sector’s growth.
“Unlike three years ago, Brazil is now among the main markets. This brings competition in manufacturing and distribution. Today, there are more than 200 distribution companies in Brazil. Not so long ago, there were at most 20 companies,” he said.
The return on investment has also dropped to four years. An average residential system in Brazil costs R$19,500 for 4 kWp, compared with R$20,600 a year ago. The reduction in the discounts for distributed generation installations as of 2023 should change this situation, since the industry foresees a “race for the sun” this year, as consumers are expected to join now to use the grid free of charge by 2045.
The change in the rules for solar generation associated with the increasing interest of power consumers in reducing costs has driven growth. “This shows that distributed generation is a competitive solution for consumers, even though electricity bills [in general] have dropped due to the reduction of the state tax [ICMS],” the executive said.
On the other hand, the high interest rates held financing back. About 54% of sales were financed, compared with 57% in the previous survey. Mr. Takata bets that despite pressured production chains, the solar power industry should maintain strong growth in the coming years.
Total production of 271.4 million tonnes is expected for 2022/2023
08/25/2022
A soy farm in Brazil: production of the oilseed will reach 150 million tonnes in 2022/23 — Foto: Anna Carolina Negri/Valor
The Brazilian production of grains is expected to hit a new record in the 2022/23 crop, according to the first projections of the National Supply Company (Conab) for the season, released on Wednesday.
Driven by the increase in the area and good profitability of soybean, corn, and cotton crops, the harvest may grow 13.5% and reach 308 million tonnes, despite the increase in production costs — if, of course, the weather is favorable.
If the projection is confirmed, it will be the first time that the Brazilian grain harvest will exceed 300 million tonnes. More than 90% of the volume, or 294.3 million tonnes, will come from soy, corn, cotton, rice, and beans.
For the 2021/22 harvest, Conab estimates a total production of 271.4 million tonnes, with some crops still being closed, such as corn, wheat, and cotton.
According to the state-run company, soy production will reach 150.36 million tonnes in 2022/23, 21% more than in 2021/22, and a new record. Even with higher costs, the attractive prices of oilseeds in the international market are expected to stimulate a 3.5% increase in the area, to 42.4 million hectares.
The productivity of the 2022/23 cycle may also recover after the drought that affected the South region and part of Mato Grosso do Sul earlier this year.
With better crop yields and higher production volumes, Conab believes that soybean exports will grow 22.2% and reach 92 million tonnes in 2022/23, another record — Brazil leads the global production and exports of the grain.
With the advance of soybeans, the area planted with corn is also expected to grow in the second crop of the 2022/23 cycle and contribute to a total production estimated at 125.5 million tonnes, an increase of almost 10% over 2021/22.
For the second yearly crop, an 8.2% increase in harvested volume is expected, to 94.53 million tonnes. In the first harvest, the area is expected to fall 0.6%, estimates Conab, and production may reach 28.98 million tonnes.
In the case of cotton, the state company indicates a harvest of 2.92 million tonnes (7% more than in 2021/22), with increases in area and productivity. It is also expected a resumption of exports to a level close to 2 million tonnes.
The scenario is supported by good fiber prices defined in anticipated sales, which guarantee good profitability for the activity. But the uncertainties about the world economy, with the possibility of a recession in some countries and a decrease in demand, keep the segment on alert.
Rice and beans have similar scenarios projected by Conab, with a slight reduction in area and production adjusted to demand — and normality as far as domestic supply is concerned. The crops are impacted by the good profitability of “rivals” soy and corn.
The production of rice in the 2022/23 harvest is likely to be around 11.2 million tonnes, Conab said. The bean harvest tends to follow close to 3 million.
Conab also released its projections for the meat market, which will again face tight margins with the increase in costs driven by still firm corn prices.
Even so, Brazil may slaughter 30.1 million head of cattle in 2023, up 2.7% year-over-year. The increase is due to the movement made by cattle breeders to retain cows in recent years.
With a larger herd, beef production is likely to grow 2.9%, with the beginning of the process of culling cows in the livestock cycle. This way, exports tend to grow 5% next year. The per capita consumption in Brazil may see a slight increase and reach 26 kilos per inhabitant per year.
Poultry slaughter may increase by 3.2% in 2023, to 6.29 billion chickens. Foreign sales may fall 1.7% and stand at 4.5 million tonnes. The combination of these factors will result in a probable increase in domestic supply of 4.2%, raising per capita availability above 51 kilos per inhabitant per year, Conab projected.
The opening of new markets for Brazilian pork, such as Southeast Asian countries and Canada, is likely to mitigate the fall in exports to China, where the pig herd is recovering after a sanitary crisis.
The tendency for 2023, according to Conab, is an increase of 6.7% in slaughtering, but there will be no increase in the production of protein because of the lower average weight of the animals, due to the high costs of feeding the herds.
There are bids scheduled for five assets, which may draw R$22bn in construction works
08/25/2022
In the final months of their terms, the federal and state governments are still trying to get infrastructure projects off the drawing board despite the difficulties in attracting investors – as became clear during last week’s auction of Congonhas, one of Brazil’s busiest airports, in São Paulo. For now, five assets are still scheduled to be auctioned later this year.
The main auction, scheduled for September, is that of Noroeste Paulista, a set of roads put on the block by the São Paulo state government with an estimated capital expenditure of R$10 billion. Two other state projects in the sector are scheduled for this year, in Rio Grande do Sul and Mato Grosso do Sul. Besides these, the Ceará government will launch next month two public-private partnerships (PPP) for basic sanitation.
The five contracts combined may total R$22 billion in new construction works if they materialize.
Since the end of last year, a combination of challenges has made it difficult to draw investors to infrastructure auctions. The situation is unlikely to change by the end of 2022. Rising interest rates, high inflation, global political uncertainties, elections in Brazil, and the oversupply of projects for a limited number of investors are cited as reasons by analysts.
Claudio Frischtak — Foto: Ana Paula Paiva/Valor
“The big challenge is in drawing new operators and new investment funds. Today, we are very much in the hands of the incumbents,” said Cláudio Frischtak, CEO of the consulting firm Inter. B. In his view, among the barriers to attracting new groups are issues that will not be solved in the short term, such as the loss of the country’s investment grade and public authorities’ anti-environmental rhetoric.
Despite the short deadline and the difficulty in finding interested investors, some other projects governments still plan to put on the block this year could attract bids, in the market’s view.
The privatization of the Port of São Sebastião, an asset that has drawn interest, could still be launched on time, said David Goldberg, a partner at consultancy Terrafirma. “It is a simpler project that requires few investments and has a low barrier to entry,” he said. The auction is being analyzed by the Federal Court of Accounts (TCU). The public spending watchdog could speed up the analysis if the rapporteur of the case confirms such understanding.
The new auction of the airport of São Gonçalo do Amarante (Rio Grande do Norte) may also be carried out this year, said Mr. Goldberg, who led part of the technical studies. He sees this one as a highly-anticipated project as well. “This asset is already ready. There aren’t many investments planned.”
In the highway sector, the Ministry of Infrastructure plans three more highway concessions in the fourth quarter. The first is BR-381, a federal road in Minas Gerais, which included another federal road before a haircut was put in place to simplify the contract. Investments should total R$5.5 billion. Analysts are skeptical of this bid, largely because of the tight deadline.
In addition, the federal administration and the Paraná state government plan to auction two sets of roads totaling R$15 billion in capital expenditure. Mr. Frischtak believes that the auctions may still be held on time, but strong opposition to the collection of tolls in the state could be an obstacle.
There is also a long list of relatively mature projects that will be postponed to 2023 – and therefore depend on the outcome of the elections. There are several examples in the road segment: the new auction of the BR-040 highway, four highway lots in Paraná, and the PPP of São Paulo’s beltway (north stretch), whose auction has been scheduled for January 2023.
Another important auction unlikely to be launched this year is the one for the privatization of the Santos Port Authority (SPA). The Ministry of Infrastructure still includes the project in its forecasts. Yet the Brazilian Development Bank (BNDES), which coordinated studies on the matter, and market analysts no longer see this possibility given the complexity of the contract and question marks about the model.
There is still uncertainty regarding the continuity of several concession projects pushed forward by states and the federal administration given the change of government in 2023.
However, the perception is that many plans will continue, and logistics assets have the greatest chance of surviving the government transition, said Marcos Ganut, a partner at Alvarez & Marsal. “There is a global scenario of demand for food. This will not change because it does not depend on local policies. Market and government will be interested because these construction works are also important job generators,” he said.
Bank has allocated 43% of R$542m raised last year in two technology companies
08/24/2022
Patricia Genelhu — Foto: SilviaZamboni/Valor
A year after raising R$542 million for its first impact-investing fund, BTG Pactual has allocated 43% of its funds to two technology companies: Alliare (agribusiness) and Gran Cursos Online (education). Now, in order to invest the remainder, the bank has on the radar the health sector and projects linked to waste management and circular economy, including the development of sustainable materials for the packaging chain. Projects focused on energy efficiency, drinking water, and basic sanitation are also eligible.
According to the commitment made when it raised the funds, the bank has until 2024 to invest them. “We are optimistic about the pace of allocation and we believe it will happen before the end of the three-year term,” said Patricia Genelhú, head of sustainable and impact investments at BTG. The fund expects to return the capital to investors by mid-2028 – with profit.
Ms. Genelhú said that the entire investment rationale replicates what BTG Pactual’s asset-management business seeks with its conventional private-equity funds, and with the same consistency in terms of performance. The target return is 20% above Brazil’s official inflation index IPCA. “The difference is that it brings the best sustainability practices in the projects that receive investments, monitors the strength of the agenda in the companies, and looks at maximizing the impact.”
The distribution of the shares was concentrated on pension funds, with 39 investors in the A class. This is an audience that has looked more closely at ESG. Yet, the fund has also attracted high-net-worth families and a chunk of high-income retail. With checks starting at R$100,000 for the B share class, it has built a base of 716 individual investors.
Founded in 2013, Gran Cursos Online is a provider of preparatory programs for public hiring tests, professional exams (such as those applied by the Brazilian Bar Association and the Federal Accounting Council for new lawyers and accountants) and graduate programs. According to BTG, the investment in the company is justified by the promotion of inclusive, equitable and quality education, which contributes to reducing poverty and fostering employment. In April, the company acquired the UniBagozzi university to expand in distance education. In higher education, the goal is to reach 1 million students by 2026.
In the annual report of the impact fund, the management team mentions that the company pioneered the subscription model in the market of preparatory courses for public hiring tests with affordable prices. Since the capital injection, there has been a 38% increase in the base, with 476,000 paying students, and 71,000 enrolled in free programs on the platform. Considering people that passed public hiring tests this year, 26.5% studied with Gran Cursos, 72% of which coming from public schools. A share of 56% are black and mixed-race people, 68% have incomes of up to two minimum wages, 62% are women, and 51% of the students came from cities with less than 200,000 inhabitants.
Aliare, the other company that received investments, has taken technology to the fields with the objective of supporting agriculture in the transition to a low-carbon economy and increasing the income of farmers. According to BTG, the company contributes to a better efficiency in the use of inputs, preservation of natural resources, and food security. The result of the merger of two groups focused on the development of software for agribusiness, the company founded in 2019 Conexa, an innovation hub to encourage the development of technology startups in the sector.
Beyond the impact fund, Ms. Genelhú said that BTG’s asset management company has been focusing on other sustainable investments, such as a dedicated debt portfolio in emerging countries, as well as a strategy of reforestation assets.
In her view, the sustainable finance market is gaining prominence, with companies interested in being recognized as issuers by ESG criteria. The challenge, she said, is to avoid “greenwashing” practices.
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