Broadband internet improves agricultural production, workers’ lives

Survey shows 71% of households in rural areas had internet access last year in Brazil

07/25/2022

Cristian Dalben — Foto: Divulgação

Cristian Dalben — Foto: Divulgação

The arrival of broadband internet to the Santo Antônio do Desejado farm, in Nova Ubiratã, a municipality in Mato Grosso with 11,000 inhabitants, spared farmer Cristian Dalben from a labor problem. “In the beginning, we didn’t have so much difficulty in hiring people because there was no internet. Today, I have 26-year-olds working with me,” he says, “and this younger generation doesn’t stay on a farm without a connection.”

Internet came to the property about 10 years ago, but via radio, with very low speed and limited to the farmhouse. “To shoot a video? No chance. Pictures were also difficult,” recalls the rural producer. Mr. Dalben managed to bring fiber optic connection to the farm three years ago, which, according to him, increased the satisfaction level of the workers. “Our employees are happy to be on the farm because they can have fun during their free time, watch Netflix or just surf the Internet,” he says.

The report on the benefits that the arrival of quality internet has brought to the workers of the Santo Antonio do Desejado farm shows that improved access represents more than just the possibility of using connected agricultural machinery or technologies of the so-called Internet of Things (IoT): it also changes the daily lives of all people involved in production. And this is no small matter.

According to a recent survey by the Regional Center for Studies on the Development of the Information Society (Cetic), 71% of households in rural areas had internet access last year in Brazil, an advance of 20 percentage points over 2019. Of this total, 58% had fixed broadband.

Mr. Dalben understands well the difference it makes to have internet access in the fields, and not only to streamline production. Thirteen years ago, when his father became ill and he had to leave Curitiba, where he was studying mechanical engineering, to take over the family business in Mato Grosso, the only means of contact with the world beyond the limits of the property was a landline phone. “I spent three years isolated,” he says.

Today, broadband keeps the farm connected to the world, which makes workers happier and allows farmers to extract the full potential of contracted digital technologies. The farm is connected to Bayer’s Climate FieldView platform and John Deere’s Operation Center. Before the connection reached the entire area of Santo Antônio do Desejado, the investment was underused, since the sending of data for analysis only happened when the machines returned to a point closer to the farm headquarters, where there was a connection.

“Recently, I was in the United States and the people were working on the harvest of the second yearly crop corn. I was able to observe the whole farm in real time,” says the farmer. “And days ago, a machine broke down. If this had happened in the past [when there was no internet], we would have had to run into town. This time, John Deere sent an online update that solved it.”

Connectivity improves business for equipment users and also for manufacturers. “Before, the technician would leave the city, go to the farm, come back, pick up the machine, and only then go to make the repair,” says Estela Dias, tactical marketing manager for precision technologies at John Deere in the country. “We have improved this service. Now, we can access the monitor of the equipment to understand the problem and go straight with the solution.”

Since 2020, a partnership between the U.S. agricultural machinery manufacturer and phone operator Claro has brought internet to an area of 2 million hectares. With ongoing negotiations, there is an expectation of coverage of more 3.5 million hectares. “Democratizing the connection in the fields also means connecting people. It helps retention [of workers in the fields], facilitates the arrival of content to them and allows advances such as telemedicine.”

Bayer, owner of the Clima FieldView platform, has been working to extend the reach of 4G technology in rural areas through ConectarAgro, an association it helped found. “Increasing connectivity in the field represents an opportunity for farmers to enjoy even more benefits and tools that help them make more accurate decisions,” says Thiago Bortoli, the platform’s head of marketing for Latin America.

The results of the farm in Nova Ubiratã are an example of the positive impacts of digital farming technology on crop productivity. Before the arrival of fast internet, Mr. Dalben produced 62 bags of soy and 100 bags of corn per hectare; now, the production is 75 bags of soy and 174 bags of corn per hectare, a performance well above the national average.

According to Marcos Ferrari, executive president of Conexis, association that represents telecoms operators in Brazil, the expansion of internet in farms has gained momentum since 2017. “This movement is expected to become even more accentuated after the auction of 5G coverage, in which companies have also committed to bring the 4G signal to thousands of municipalities,” he says.

*By José Florentino — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Telcos under pressure at regulators

Association of service providers complains at CADE, Anatel against Telefônica, TIM, Claro about sale of Oi Móvel, at CADE, Anatel

07/26/2022

The Brazilian Association of Competitive Telecommunications Service Providers (TelComp) will file this week a formal complaint with antitrust regulator CADE and telecoms regulator Anatel against Telefónica’s subsidiary in Brazil (Telefônica Brasil, owner of Vivo), Telecom Italia’s TIM, and América Móvil’s Claro about the sale of Oi Móvel.

Telefônica, TIM, and Claro appealed to the courts this month because they disagreed with the values imposed by Anatel for the offer of wholesale products to competitors. For data traffic, the regulator stipulated R$2.6 per gigabyte (GB). But the telcos’ proposals range from R$16 to R$48 per GB.

These offers are the compensation that the regulators imposed on the three telcos to give their approval to Oi Móvel’s purchase. They are remedies, or conditional measures, to ensure competition in the market with the elimination of a competitor.

The incumbents decided to challenge the prices in the approval phase. They asked Anatel to reexamine the case. In court, they obtained injunctions that suspended the obligation to submit offers.

TelComp “condemns the attitude of operators with significant market power that, before the closing of the acquisition of control of Oi Móvel, made a public commitment to society to fully comply with the remedies imposed by Anatel and CADE promptly.”

The entity will ask the courts for its inclusion in the case as a third interested party, Luiz Henrique Barbosa, head of TelComp, told Valor. Claro’s case is in the 1st Federal Civil Court of the Judiciary Section of the Federal District (Brasília); those of Vivo and TIM are in secrecy.

Mr. Barbosa pointed out that the telcos’ retail price is at R$2.8 per GB. “The price Anatel has set is not detached from reality, nor is it a subsidy to competitors. It is not below cost. If they [the three telcos] say this, it is because they are practicing predatory pricing.”

Anatel and CADE officials are studying measures, including undoing the sale if the telcos do not accept the fixed prices. “If it is not possible to undo the operation, they can be fined,” said Mr. Barbosa.

*By Ivone Santana — São Paulo

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Yara issues R$520m in agribusiness receivables certificates

Resources will be used to facilitate fertilizer purchases by 26 input dealers and cooperatives

07/25/2022

The Brazilian subsidiary of Norwegian Yara, one of the largest fertilizer suppliers in the world, has just announced the issuance of R$520 million in Agribusiness Receivables Certificates (CRA), the fourth operation of this kind in the country.

The resources of the issuance, structured by the securitization company Ecoagro, with the distribution of the fixed income bonds to investors coordinated by Banco Alfa, will finance the purchase of fertilizers by 26 input dealers and cooperatives. The multinational’s main purpose is to facilitate the acquisition of inputs from its client network, reinforcing its customer loyalty strategy in the Brazilian countryside.

This is the largest CRA operation that Yara has ever made in the country. The amount is higher than the total of the two operations conducted in 2021, when it raised, in total, R$ 335 million.

The demand for rural credit has increased this year, and money, like fertilizers, is more expensive in Brazil. “We understand that meeting our customers’ business needs goes beyond having the best solution in plant nutrition,” says Maicon Cossa, Yara’s commercial vice president in Brazil.

The focus is soybeans, but there are no restrictions related to crops. The movement ends up benefiting agricultural producers, who, in turn, get better payment conditions to buy inputs at the dealers. “Even though this is not Yara’s core business, and, for this reason, we seek partners for these operations, the idea is to contribute with the producer in seeking financial solutions to make cultivation feasible,” Mr. Cossa says.

According to him, Yara does not measure the universe of farmers that it reaches with the credit offer, since it does not control how resources are passed on in the distributor channel. The executive states, however, that the network of 26 dealers and cooperatives reaches mostly small and medium producers and that the action can reach “much more than 2.000 farmers”.

According to Milton Menten, CEO at Eco Securitizadora, the resource was taken by the borrower (input dealers) at interbank deposit rate (CDI) + 1.80%, which he considers a “very good rate at this moment of the market.” The deadline for repayment is one year, much longer than the one practiced by the fertilizer industry. According to the financial agents, the demand exceeded the offer.

“The engineering of the operation and the investor’s appetite offered credit under conditions that dealers would not have individually, says Augusto Martins, head of Corporate & Investment Banking at Alfa.

“The interest in agribusiness grows every semester because it reflects the advance in governance structures of the companies. To access the capital market, it is necessary to follow a rite and a series of conditions that the Securities and Exchange Comission (CVM) imposes,” Mr. Martins says.

Eco Securitizadora issued R$8.4 billion in CRA in the first semester, an amount three times higher than in the same period of 2021. Alfa, in turn, coordinated R$3 billion in operations in the electric, sanitation, and agricultural sectors in the first six months of this year, which represented an increase of 51%.

*By Érica Polo — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Nautical sector expands business with marinas, ‘Airbnb’ of boats

Favorable tide is helping both big players, such as BR Marinas, and newcomers, such as Fleetss

07/25/2022

Isabella Salomão — Foto: Leo Pinheiro/Valor

Isabella Salomão — Foto: Leo Pinheiro/Valor

The Brazilian journalist and advertising professional Isabella Salomão noticed one day that the winds were blowing in favor of the nautical sector and had an idea. She then developed an application that is intended to become, as she says, the “Airbnb of the seas”. Named Fleetss, the app focuses on the rental of boats, done safely for owners and users through a collaborative economy platform, with reviews of tours and boats.

The favorable tide is also helping the big players in the sector: BR Marinas plans to install its first unit outside Rio de Janeiro soon. The company had a revenue increase of 17% in 2021. It reported growth during the pandemic, which, unlike other sectors, stimulated the sector.

According to the Brazilian Association of Boat Builders and their Implements (Acobar), the segment closed the year 2021 with a growth of approximately 20% (the Brazilian GDP that year had a high of 4.6%, after a fall of 3.9% in 2020).

According to the creator of Fleetss, the application is already available for registration of boat owners and to be downloaded by users. “Initially, we gave priority to the prospection of boats and adjustments to the system. On July 10, we started to rent the boats”, says Ms. Salomão.

One of Fleetss’ goals is to serve a growing market and, at the same time, offer security to boat owners and users. The model adopted, and the inspiration for the application, is Airbnb. When closing the use of a boat, the client pays the rent — which is retained and released only at the end of the tour. This way, the user has the guarantee that he will not be the victim of a scam, while the owner of the boat knows that she will be paid for the service offered.

“We had a good surprise: we were aiming for 150 registrations, but we already have 290 boats in the system. The application with the largest number of boats and the only one with national coverage [17 states]. We are an Airbnb exclusively for boats, of various types, sizes, and capacities, such as catamarans, speedboats, yachts, and sailboats,” says Ms. Salomão.

Owners need to provide a sailor to navigate. But, in many cases, as the owners have a driving license, they prefer to be the tour guides. The rentals vary greatly in price, from R$600 to approximately R$25,000 in the case of yachts.

Fleetss has currently 2,000 users registered to rent the boats. Ms. Salomão explains that the idea is to use the concept of the collaborative economy: “The application has space for a description of the boat, with photos and comments from customers. After the tour, the owner receives an evaluation. The goal is to make something safe for both parties.”

The app receives 5% of the rent, while the fee for users is 10%. “What is left for Fleetss is 15%, a rate that we consider fair in the market, in which other companies have been charging more,” says the creator. In the future, the goal is to expand the service to other countries, starting with Mexico and the United States. In addition, Ms. Salomão is thinking about creating a project for the sale of boats.

*By Denis Kuck — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/
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Sírio-Libanês forms partnerships to create health plans

First contract was closed with lawyers’ association; another one is under negotiation with health insurance company

07/25/2022

Daniel Grecca — Foto: Silvia Zamboni/Valor

Daniel Grecca — Foto: Silvia Zamboni/Valor

The Sírio-Libanês Hospital is diversifying its operations by forming partnerships with health insurance companies in the creation of health plans in which the hospital’s entire network is accredited – a verticalization that has the credibility of the brand to its advantage. It is also expanding its primary medical care services to companies that hire Sírio to offer this type of care to their employees. This week, the fifth unit dedicated to primary health care was opened in São Paulo.

“I am a great believer in the primary care model, which focuses on prevention and not on disease. With digitalization, more people have access to private health care and access to quality care. With the growth of prevention actions there won’t be as many large hospital structures like ours, but high complexity hubs,” said Sírio-Libanês CEO Paulo Nigro.

The first contract of a group health insurance plan that includes just the doctors and laboratories from the Sírio-Libanês hospital was signed with the Lawyers’ Assistance Fund, from Brasília, where the hospital has a facility. The lawyers and their dependents also have the option of choosing health plans with an open network. The hospital is in final negotiations with a health insurance company to offer this same product format, which in general has a lower cost than health plans with a broad service network.

“In this model, there is a family doctor who accompanies the patient’s entire journey. The consultations with specialists, exams, and hospital procedures are done internally, with our own protocols,” said Daniel Grecca, head of population health at Sírio-Libanês, the area responsible for these partnerships.

Mr. Grecca’s department is responsible for a portfolio formed by 180,000 people, who are health plan users or employees whose companies or health insurance hire Sírio for certain services such as primary medical care, digital emergency care, and management of chronically ill patients, one of the segments that most increase the cost of the health plan.

“With digitalization, it is possible to offer a variety of services. Currently, 60% of the hospital’s consultations are digital, the resolution rates are 80%, and satisfaction rates reach 95%,” said Mr. Grecca. The online service will allow Sirio to serve other markets. Today, its operations are restricted to São Paulo and Brasília, but the idea is to partner with other establishments in case there is a need for face-to-face service.

The creation of health plans with specific hospitals began about three years ago in the market when Amil withdraw accreditation of hospitals from Rede D’Or. The measure affected Rio de Janeiro, where the main hospitals belong to Rede D’Or. To attend this niche and to be able to offer a product at a price like Amil’s, Bradesco developed a health insurance plan with a network of accredited doctors and hospitals composed of D’Or’s hospitals and doctors. Many Amil users migrated to this product, which had a great demand.

Besides, it is a way to compete with Hapvida/NotreDame Intermédica, which has a wide vertical network and a much lower cost.

*By Beth Koike — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Solar becomes third source in power generation mix

Large solar farms and small self-generation projects generate 16.6 GW, which surpasses natural gas and biomass

07/20/2022

There are a total of 16.4 gigawatts (GW) of solar power in large solar farms and small self-generation projects — Foto: Pixabay

There are a total of 16.4 gigawatts (GW) of solar power in large solar farms and small self-generation projects — Foto: Pixabay

Solar photovoltaic power has surpassed the installed capacity of natural gas and biomass thermoelectric plants and is now the third largest source in the national power generation mix, behind only hydroelectric plants and wind farms, according to a survey carried out by the Brazilian Association of Solar Power (Absolar), with data from the Brazilian Electricity Regulatory Agency (Aneel).

There are a total of 16.4 gigawatts (GW) of solar power in large solar farms and small self-generation projects, compared to 16.3 GW of natural gas and 16.3 GW of biomass. According to Absolar, since 2012 the solar source has brought Brazil more than R$ 86.2 billion in new investments, R$ 22.8 billion in revenue to the public coffers, and generated more than 479,800 jobs. This has also avoided the emission of 23.6 million tonnes of CO2 in electricity generation.

For Carlos Dornellas, director of the entity, the growth of solar power in Brazil, through large solar farms and self-generation in homes, small businesses, rural properties, and public buildings, is fundamental for the social, economic, and environmental development of Brazil.

“The solar source helps to diversify the supply of electrical energy in the country, reducing the pressure on water resources and the risk of even more increases in the population’s electricity bill,” says Mr. Dornellas. “The large-scale solar farms generate electricity at prices up to ten times lower than emergency fossil thermoelectric plants or electricity imported from neighboring countries, two of the main responsible for the tariff increases on consumers.”

A large photovoltaic farm becomes operational in less than 18 months, from auction to electricity generation. On the other hand, the source is intermittent and does not generate energy during the night.

Hydroelectric plants occupy the first position in the generation power mix, with more than 109 GW of installed capacity, and wind power follows in second place, with 21.9 GW of power.

*By Robson Rodrigues — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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“New” Eletrobras among ten most valuable companies on B3

Analysts are resuming coverage of electric company after privatization

07/20/2022

Eletrobras: the largest power utility in Latin America gained ten positions and overtook B3 giants — Foto: Ana Branco/Agência O Globo

Eletrobras: the largest power utility in Latin America gained ten positions and overtook B3 giants — Foto: Ana Branco/Agência O Globo

After a self-imposed quarantine, analysts are slowly resuming coverage of the “new” Eletrobras, now privatized. The company’s investor website reports that it is covered by 12 banks and brokerage firms. It turns out that all were directly or indirectly involved in the public offering that led to the privatization and therefore decided to suspend coverage.

There is talk on Faria Lima Avenue, São Paulo’s financial hub, that this was a ban by Brazil’s securities market authority CVM. This is not the case. “The CVM rules don’t prohibit reporting, but in practice that’s what happens,” said Lucy Sousa, president of the Association of Capital Market Investment Analysts and Professionals (Apimec).

It does not forbid it, but the regulator of the capital market has already suspended offers because of news in the press, including raids on brokerage houses. So, although there is a separation between the analysis segment and the sector that makes the public offers, the investment bank, nobody says or writes anything to avoid any suspicion of conflict of interest. The investor who depended on this information had to look for it in the smaller, so-called independent houses, which, in these circumstances, is still an appropriate identification.

Now freed from the shackles of conflict, analysts are talking wonders. At a time of widespread cuts in target prices in an environment of inflation and high interest rates, with valuation professionals in a frantic race to adjust their models to rapidly changing scenarios, Eletrobras shines among the few exceptions.

The company’s shares had already been rising with the prospect of the federal government’s exit, but it was a risky bet in a presidential election year in which one of the candidates is radically against privatization and even threatened to reverse it if elected. The bravado did not prevent the privatization, which put the power utility on a new level, reflected in the valuation of its shares.

At the end of June, both common and preferred (PNB) stocks hit nominal record highs of R$46.20 and R$46.70, valuations of 44% and 50%, respectively, in the semester, while benchmark stock index Ibovespa fell 5.18% and the IEE, the electric sector’s index, rose 5.48% in the period. In the public offering, in May, the common share was sold by the federal government for R$42.

The largest power utility in Latin America gained ten positions and overtook B3 giants such as Suzano, JBS and Banco do Brasil in the ranking of the largest publicly traded companies by market capitalization. On Wednesday, it was vying for seventh place with BTG Pactual, valued at around R$100 billion. Twelve months ago, the then state-owned company was worth R$68 billion.

Analysts expect more. With expectations of more cost cuts and efficiency gains, the projected prices for twelve months range from R$62 to R$67 for the common share and from R$62 to R$71 for the PNB, potential appreciations of about 50% in relation to this Tuesday’s prices.

Four banks resumed coverage, all with a buy recommendation – Bank of America (BofA), BTG Pactual, JP Morgan and Credit Suisse. As a consequence of the new private management, they are forecasting better results. With this, a new level of dividends, closer to what is usually expected from a company in the electricity sector. And a migration to Novo Mercado, a section of the B3 exchange with stricter governance rules, is also expected soon.

BofA’s target prices are R$62 (common shares) and R$67 (preferred stock, PNB). BTG analysts, with a price of R$62 (common stock), consider it one of the cheapest shares among those monitored by the bank. For JP Morgan, it is the main choice of the sector, at R$64 (common share). Credit Suisse sees a “bright future” and sets prices of R$67 (common stock) and R$71 for PNB.]

*By Nelson Niero — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Genial joins solar generation market to serve small consumers

Company will launch 5-MW plant in Vassouras, first of several projects at cost of R$250m

07/19/2022

Sergio Romani — Foto: Leo Pinheiro/Valor

Sergio Romani — Foto: Leo Pinheiro/Valor

Genial Energy, the energy arm of Genial Investimentos, has kicked off the operation of several distributed generation solar plants. At the end of July, the company will launch the first 5-megawatt plant in Vassouras, Rio de Janeiro. This will be the first of several projects totaling 50 MW at a cost of R$250 million, with conclusion foreseen for the first half of 2023.

Initially, the plants are expected to be located in the Light-Enel Rio concession area. Today Genial’s trading company has 278 clients that buy energy in the free market. However, the need to offer solutions to customers that require medium and low voltage power triggered the investment in distributed generation.

Genial Energy CEO Sergio Romani told Valor that the company will focus on customers who do not have the space or interest in setting up their own solar power generation structure. In this case, Genial leases a fraction of the plant to the customer to generate its own energy. The first plant has 60 clients with an average electricity bill of R$19,000.

The movement is not new. Many trading companies are diversifying their businesses beyond buying and selling power, and also offering services to consumers and generation companies. Genial Energy’s idea is to use the customer base of its investment platform to expand the business in the future.

“Genial Investments has a customer base of 878,000. The cost of acquisition is close to zero,” Mr. Romani says. “The first plant, which starts operating this month, will be in Light’s area. The reason for us to invest in Rio in this first phase was the low supply of projects in the region and the great demand from our customer base.”

At this moment, the executive says he is in talks with owners of plots of land over surface rights, with contracts of 25 years – extendable for 25 years more –, which will be used as underlying assets to issue real estate receivable certificates (CRIs).

The EBITDA is projected at R$130 million per year when everything is ready. The investment in the first plant was fully financed with the own capital. The company says it has invited some of Genial clients to expand the project to 100 MW in more than 20 plants. This investment will require R$500 million, 75% of which via debt, and will be made both with own capital and third-party capital.

“With the plants ready, the ticket is expected to fall so we can offer the product in the retail market, for residential consumers. To serve this market, Genial has created a specific solar company with its own online marketplace to support this operation.”

The company’s focus is on solar generation because it is more modular for retail when compared to other sources, and the execution time is shorter. The first plant will be connected to Light’s network.

Data from the Brazilian Association of Electricity Distributors show that the connection of distributed generation systems to the grid has doubled in two years. In 2020, almost 19,000 connections were made per month. The level has increased twofold to an average of 38,000 this year.

The utilities are complaining because when consumers migrate to distributed generation, they lose a portion of those customers who pay some fees included in electricity bills in Brazil. Light mulls opportunities for investments in new businesses in order to meet the needs of its customers. “The company is investing more than R$30 million in a distributed generation project to serve consumers in needy communities in the Metropolitan Region of Rio de Janeiro,” says Alessandra Amaral, Light’s head of energy, commercialization and regulation.

*By Robson Rodrigues — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Executive jets sales soar in Brazil

Banks intensify aircraft financing; it reached R$4.1bn by the end of 2021

07/19/2022

Sérgio Granado and Vitor Ohtsuki — Foto: Carol Carquejeiro/Valor

Sérgio Granado and Vitor Ohtsuki — Foto: Carol Carquejeiro/Valor

If car sales rose during the pandemic, with the middle class trying to escape the crowds in public transportation, in the more exclusive segment this movement has also been observed. Sales of executive jets have soared in recent years in Brazil, leading banks to take a closer look at this niche. Although it is a small market, as the ticket prices are high – between US$ 3 million and US$ 60 million – it guarantees multimillion portfolios for financial institutions.

According to data from the Brazilian Association of Leasing Companies (Abel), the main form of financing for aircraft, the value of fixed assets leases in this segment was R$4.1 billion by the end of 2021. Bradesco for many years led this market and, last year, had a 42.1% share, with R$1.7 billion. However, Santander created a specific area two years ago and has been growing strongly, with R$1.5 billion in fixed assets leases at the end of last year, or a market share of 36.8%. Other relevant players are Alfa, Citi, and Daycoval.

Brazil is the second-largest executive aviation market in the world, behind only the United States, with more than 16,000 aircraft. The head of Santander Private Banking, Vitor Ohtsuki, says that the bank saw an opportunity to enter this segment in 2020, with the increase in demand due to the pandemic and the strong movement of IPOs. These “liquidity events”, as they are called, have collaborated with the emergence of many millionaires in Brazil in recent years. Since then, the bank has financed 31 aircraft and expects to double this volume in the next 12 months. “There are clients who buy for leisure, but there are also many who use them for business. With a small jet, the time they save compared to a normal flight is often worth it.”

According to Mr. Ohtsuki, the bank started working with the top of the pyramid, that is, clients with R$40 million, R$50 million investment portfolios. Thus, it created a swift process that helps the client from the beginning to the end of the aircraft purchase, including tax, legal, and import issues. Now it is moving down the pyramid, including the agribusiness segment, aiming jets for farm owners (not those small aircraft used for spraying). The tickets are smaller, but the market potential is huge.

“It is a large volume of lower value aircraft. We have already talked to the 100 largest agribusiness producers, and now we are going to expand to other producers who are clients of the bank, but who are not necessarily in private banking,” says Sérgio Granado, superintendent of Products at Santander Private Banking.

At Bradesco, the financed amounts increased 134% in 2021 compared to the previous year, while the number of aircraft increased 130%. Júlio Paixão, chief loans and financing officer, says that 2020 had a bad result, due to problems in the aircraft production lines, but that 2021 was much better and this year, even in a scenario of economic slowdown, and the next should benefit from orders that are still being held up. “Last year we had a high demand for used aircraft. We even brought units that were flying in the U.S. to be sold here”, he says.

Unlike Santander, Bradesco works in partnership with the largest trading companies in the market. Mr. Paixão says that because of supply issues aircraft prices rose 47% last year, which also helped boost financed volumes, and with waiting lines until 2024, he doesn’t foresee a drop in prices any time soon. “With the pandemic, many private clients ended up showing a willingness to stop using commercial flights,” recalls Bruno Vilarinho, manager of the Loans and Financing department.

At Alfa, Ana Portela, national financing superintendent, says that the bank does not work only with leasing, but ends up using other lines of financing. According to her, the portfolio grew 50% last year and, in the first half of this year, it expanded 20%. As the second semester is historically better, the expectation is to close 2022 with an increase of 25% to 30%. “In the pandemic, with the cancellation of many flights, businesspersons found themselves without options and many ended up bringing forward the planning they already had of buying an aircraft, to be able to continue their business.”

According to her, there is no full correlation between this segment and the performance of the economic activity, but the increase in depreciation of the real affects the financing since all the costs of the sector are in U.S. currency. “There is a concern with the moment to acquire the good because everything is dollarized, but clients with this profile have programmed themselves for this, they have been following the market. They won’t go back on this decision, so I don’t see a step-back movement in the aircraft market.”

As in leasing, the asset belongs to the bank, and the default on aircraft financing is low. Not least because, as the borrower is most often a private banking client, the financial institution has a lot of information about his or her assets and payment capacity. The “know your client” processes are very robust, which makes it virtually impossible that the financed aircraft is diverted and used in illicit activities, such as drugs and weapons trafficking. In addition, the bank usually insures the vehicle.

The financing of business aircraft also includes helicopters. Even so, the possibility of expanding this credit to manned drones, the so-called “flying cars”, is still seen as something remote by executives in the sector. “Since leasing the property belongs to the bank, there is a great deal of rigor about the type of aircraft we finance. We need to have insurance available for them, for example. I think that drone financing may even happen in the future, but through corporate credit, for companies that operate with this type of aircraft. It takes longer to get to executive aviation,” says Vilarinho. “This is a market for 5, 10 years from now. You have to wait for the regulation and the creation of a logistic air network. When this happens, and the market evolves into a private means of transportation, we will follow this market”, remarks Mr. Paixão.

*By Álvaro Campos — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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B2B e-commerce to grow 19.7% per year through 2030

Growth is driven by emergence of B2B online marketplace platforms

07/19/2022

Ambev is betting big on Bees, its digital sales service for bars and restaurants — Foto: Márcio Garcez/Folhapress

Ambev is betting big on Bees, its digital sales service for bars and restaurants — Foto: Márcio Garcez/Folhapress

Marketplace platforms, which bring together products from several retailers or manufacturers, have become a common environment in the consumer’s buying habits. Now, however, it is in transactions between companies that this model is growing at accelerated rates, promising to increase the customer portfolio of the industry, which can also capture data that help to define portfolio strategies, pricing, and even to sell services linked to products.

Ambev, for example, is betting big on Bees, its digital sales service for bars and restaurants. Besides its beers and soft drinks, the group houses in its ecosystem “small stores” of BRF, M. Dias Branco, Pernod Ricard, and Beam Suntory. By the end of the first quarter, the annualized gross merchandise volume sold (GMV) reached R$1.2 billion. BRF itself has teamed up with the technology company VTex to develop a marketplace in Chile.

According to Isaac Pessanha, VTex’s B2B leader, demand from companies for projects for these ecosystems has grown by triple digits. “The market is still incipient in Brazil and Latin America for the potential it has,” adds Erick Buzzi, VTex’s vice president of sales.

The B2B platform model is “currently at the stage B2C [sales to the final consumer] was 10 years ago”, says Guido Carelli, vice-president of B2B at Infracommerce, which develops software for online commerce. This year alone, the business unit headed by Carelli is developing 15 to 20 marketplaces for companies. Unilever’s Compra Agora platform is one of them.

Carelli says the industry began to realize the growth potential of this channel, especially for reaching small and medium sales points, such as neighborhood grocery stores or bakeries. The B2B business already accounts for 30% to 40% of Infracommerce’s revenue.

Data from research firm Grand View Research indicate that B2B e-commerce moved $6.88 trillion in 2021 and that the growth of this market should average 19.7% per year through 2030. Online retail for the end consumer, which is more widespread and experienced a boom in the pandemic, is expected to grow 9.7% per year until 2028.

But the big jumps are likely to come from the marketplaces. The estimate of the British payments research and consulting firm IBe TSD is that they will have a $3.6 trillion turnover in 2024, accounting for 30% of all B2B digital sales. In 2018, these sales were no more than $680 billion.

Among the reasons for creating a B2B marketplace, or joining a platform as a seller, are the ability to expand presence geographically, increase order frequency, and the number of items sold. According to Mr. Carelli, when a company starts selling on a marketplace, its sales can jump by 15% to 25%, depending on the region in the country.

Besides reducing costs by not needing to send a sales representative to the site, the manufacturer has more data about the purchasing habits of small and medium retailers, and the salesperson starts to act more like a consultant, suggesting what the retailer can buy and “reactivate” those who haven’t placed an order in a while, say executives interviewed by Valor.

The B2B marketplace does not come alone, says Pessanha. “It brings potential and the need to reevaluate credit even to foster that ecosystem.” In other words, in addition to selling their products, manufacturers have a better understanding of the credit profile of small retailers that were previously only served by distributors. Thus, the industry can define how much credit it is willing to give to each buyer, either in terms of limits or payment terms.

There are, however, some obstacles to development. One of them is the risk of cannibalization. Carelli says that the pace of emergence of platforms should continue intense over the next five years, but from there on there should be a consolidation.

For Fernando Gâmboa, partner and leader of consumption and retail of KPMG in Brazil and Latin America, although they benefit from working with “raw” market data and start to function as full-service providers, the companies are advancing in the distributors’ territory. “Besides breaking long-term contracts with the distributor, he will stay in the region and may bring in competitors.”

But both VTex and Infracommerce executives affirm that the figure of the distributor does not cease to exist. He can even enter as a seller on the platform, selling items from other companies, they say. “It is not disintermediation. It helps the distributor to increase inventory turnover, to optimize truck use. There is more information exchange,” says Mr. Pessanha.

*By Raquel Brandão — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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