| RIO DE JANEIRO, April 14
RIO DE JANEIRO, April 14 The group representing
Brazil's buyout industry is in talks with the government and
lawmakers to implement a lower tax structure on venture capital
funds to help lure more money into the highly-risky segment,
senior executives said on Monday.
Associação Brasileira de Private Equity & Venture Capital is
working closely with finance ministry officials, senators and
lower house deputies in the creation and implementation of a tax
framework that stimulates the venture capital segment, said
Fernando Borges, who on Monday was elected as president of the
group, known as ABVCAP.
Borges, currently a managing director and co-head of private
equity at the Carlyle Group LP, said the plan would allow
the birth of many enterprises in a country where conditions for
entrepreneurship may be tougher than in other major economies.
Borges' term at ABVCAP ends in April 2016.
Under the plan, venture and seed capital funds - investment
vehicles that buy stakes in nascent businesses and help
transform the latter into companies - would see their tax burden
decline the longer they keep their investment in the enterprise.
The move, along with a change in the way funds are held
accountable for a potential bankruptcy of an investment, could
help so-called "angel investors," as the funds are usually
known, deal better with high mortality rates in incipient
The move underscores the difficulties of investing in new
ventures in Brazil, the world's seventh-largest economy and a
country struggling with high bureaucracy, a regressive tax code,
growing state intervention across the board and an unhealthy
climate for business. The country ranked 116 in the World Bank's
Doing Business list of 189 nations, noting how difficult is to
create and keep a business open there.
Speaking in Rio de Janeiro, where ABVCAP is hosting its
annual summit, Borges noted that "a more benign fiscal and tax
structure for these vehicles would help ensure their survival
and, why not, their blossoming as a stronger source of money for
new enterprises in Brazil."
He declined to elaborate on other terms of ABVCAP's
proposal. Securities industry watchdog CVM and other market
participants will at some point be consulted on the feasibility
of the plan, executives at ABVCAP said.
"We feel there is a lot of receptivity in Brasilia over our
demands and suggestions," said Clovis Meurer, whom Borges
replaced as president of ABVCAP.
(Reporting by Guillermo Parra-Bernal; Editing by Bernard Orr)