Vol. 4, No. 11

The LAVCA Reporter
Vol. 4 No. 11, June 2006

ANNOUNCEMENTS

LAVCA, THOMSON FINANCIAL TO LAUNCH INDUSTRY SURVEY
July 9, 2006 -- The Latin American Venture Capital Association (LAVCA) and Thomson Financial (TF) have entered a formal partnership to collect annual data on venture capital and private equity (VC/PE) investments and fundraising in Latin America and the Caribbean. "The value of this project, which unquestionably exists for everyone active in our industry, is contingent upon the willingness of fund managers to contribute to the survey process," said LAVCA Research Director Ramona DeNies. "We believe that the increasingly professional fund managers in the region today are both open and hungry enough for quality data to make this project a success by participating." Surveys will be circulated in July among fund managers currently active in the region.

SAVE THE DATE!

LAVCA LP/GP ROUNDTABLE
October 12, 2006 - Hilton Washington Embassy Row - Washington, DC
On October 12th in Washington, DC, LAVCA will host an unprecedented networking and information-sharing opportunity for LAVCA members. LAVCA's 2006 LP/GP Roundtable convenes international investors and LAVCA members representing leading investment funds in Latin America and the Caribbean, key service providers and official institutions supporting the industry. This exclusive half-day event will engage LPs and GPs in telling the story of venture capital and private equity in the region.

NEWS PREVIEWS

NAFTA FUND ANNOUNCES THIRD INVESTMENT FOR 2006
June 6, 2006 -- Mexico City-based NAFTA Fund of Mexico, LP recently announced a private equity investment in leading Mexican logistics and distribution firm Pacific Star, its third investment this year. Through this transaction, NAFTA Fund acquired JP Morgan Partners' majority equity stake in Pacific Star by way of a co-investment alongside Arancia Industrial, S.A. de C.V. NAFTA Fund of Mexico, LP.

PE INTEREST IN LATAM GROWING DESPITE RISKS
June 19, 2006 -- By all accounts, the recent seizure of foreign-owned oil fields in Bolivia and Hugo Chávez's persistent attempts to extend his influence and policies beyond Venezuela's borders have not dampened private equity interest in Latin America -- and for good reason. With very few exceptions, most Latin American countries are better places to invest than they were only a few years ago, with more stable economies and in many cases, even recent legal reforms specifically formulated to attract foreign investment. Goodwin Proctor.

UMBRALCAPITAL: NUEVOS RECURSOS PARA EL SECTOR
21 de junio de 2006 -- Hace poco más de un año, se anunciaba que UmbralCapital, empresa que nació con el objetivo de proveer de capital de riesgo a proyecto de vivienda en diferentes plazas, apoyaría a los desarrolladores con inversiones de 500,000 dólares hasta 3 millones 500,000 dólares, a fin de cubrir las fases iniciales de sus desarrollos inmobiliarios. UmbralCapital inició operaciones con una inversión de 20.5 millones de dólares, provenientes de Discovery Americas I (DAI), fondo de inversión integrado por Protego, y por Discovery Capital, compañía de inversión dirigida a mercados emergentes. El Economista.

FUNDOS BRASILEIROS INICIAM NOVO CICLO E PREPARAM CAPTAÇÃO DE R$5B
26 de junho de 2006 -- Em Brasil, os fundos de investimentos em participações (FIPs), também conhecidos como de "private equity" estão começando um novo ciclo de investimentos. Na Comissão de Valores Mobiliários (CVM), já foram informados esse ano a criação de pelo menos dez fundos, que somam mais de R$ 5 bilhões em patrimônio, incluindo os que obtiveram dispensa de registro. Entre as novas carteiras, está o fundo Logística Brasil, de R$ 500 milhões, e o AG Angra Infra-estrutura, de R$ 750 milhões. Valor Econômico.

BIOTECNOLOGIA, VAREJO, INFRA-ESTRUTURA DEVEM ATRAER RECURSOS
26 de junho de 2006 -- A nova rodada de investimentos dos fundos de private equity será mais diversificada que a primeira, avalia Álvaro Gonçalves, sócio do Stratus Banco de Negócios e conselheiro da Associação Brasileira de Private Equity (ABVCap). "O ciclo anterior ficou muito concentrado em internet e privatizações", diz. Para este novo ciclo, setores como biotecnologia e varejo, além do agronegócio e infraestrutura devem ganhar mais atenção dos gestores que avaliam oportunidades de investimentos. Valor Econômico.

RIO BRAVO FECHA ALIANÇA PARA CRIAR A HORTUS AGROINDÚSTRIA
27 de junho de 2006 -- A Rio Bravo, empresa de investimentos que tem como um dos sócios o ex-presidente do Banco Central Gustavo Franco, está ampliando investimentos nos agronegócios. A gestora aliou-se ao empresário Roberto Rutigliano Júnior, um dos idealizadores da sobremesa Miss Daisy, adquirida posteriormente pela Sadia, para criar a Hortus Agroindústria, uma empresa de processamento de legumes cujo carro-chefe serão as batatas pré-fritas congeladas. Valor Econômico.

MANUFACTURING SECTOR: ARGENTINA, BRAZIL, CHILE
June 28, 2006 -- Over the last few decades South America has been a focus of enormous hopes and great disappointments for private equity investors. Yet to the surprise of many forecasters and analysts, Argentina, Brazil and Chile have emerged rapidly from the recent period of economic stress. Overall growth has regained momentum, and trade in particular has revived sharply. Foreign direct investment has increased dramatically, and the resurgence is most evident in manufacturing businesses. KPMG International.

BRIEFS

URUGUAY COMPLETES SALE OF NUEVO BANCO COMERCIAL
June 5, 2006 -- Uruguay has completed the sale of local bank Nuevo Banco Comercial (NBC) to a group of investors led by global private equity firm Advent International for $167 million. NBC is Uruguay's largest commercial bank and was formed by the government at the end of 2002 as a result of the country's banking crisis. The Bank was created by acquiring the best assets of three banks that had been suspended from trading: Banco Comercial, Banco de Montevideo and Banco Caja Obrera. Latin Finance.

CESP TO SEEK US$2.4B IN NEW CAPITAL
June 6, 2006 -- Brazilian state-run power company Companhia Energética de São Paulo (Cesp) is planning to tap domestic and international investors for $2.4 billion of new capital to help lower its debt costs. The money will be raised via a primary and secondary share issue worth $1.27 billion, a debenture issue of up to $885 million and up to $288 million of receivables. The company said it was also preparing to meet the requirements of Bovespa's Level 1 of corporate governance. Latin Finance.

PAMPA SEEKS NEW SHARE OFFERING
June 6, 2006 -- Argentine holding company Pampa, the private equity investment channel set up by local Dolphin group, will seek approval from shareholders on June 16 to increase its capital by $292 million via a new share offering. Pampa raised $45.5 million at the end of May when it issued 140 million shares. Latin Finance.

STRATUS INVESTE EM BIOMASSA
13 de junho de 2006 -- O Stratus Banco de Negócios prepara o lançamento de mais um fundo de venture capital. Trata-se do Stratus VC III para investir em empresas que atuam com tecnologias e produtos comprometidos com a responsabilidade sócioambiental, como o uso sustentável da biomassa. O fundo já captou R$ 60 milhões. Outra área de interesse, também ligada à geração de energia limpa, é a estruturação de projetos de Certificados de Redução de Emissões (CREs), os créditos de carbono. O Stratus já identificou 130 oportunidades de investimentos na primeira fase de análise, mas apenas 6 a 8 empresas serão escolhidas, segundo o diretor Philippe Lisbona. O fundo buscará empresas com atuação já consolidada, faturamento anual entre R$ 20 milhões e R$ 100 milhões e que necessitem de recursos para expandir o negócio. Estima-se que, entre 2005 e 2009, os investimentos de fundos de venture capital em tecnologias limpas em todo o mundo atingirão cerca de US$ 10 bilhões. Gazeta Mercantil.

CLOTHES GROUP CHANGES HANDS
June 15, 2006 -- International buyout group Advent International has acquired Mexico's biggest discount clothes retailer, Controladora Milano, for US$200 million. Milano was sold by Newbridge, another private equity group. Latin Lawyer.

PETROBRAS TO SELL CONTROL OF TRANSENER
June 15, 2006 -- Petrobras Energía, part of Brazil's state-owned oil concern Petrobras, is to sell its 50% controlling share in Argentina's Compañía de Transporte en Energía Eléctrica en Alta Tensión Transener (Transener). Petrobras is selling its stake in the Argentine electricity distributor to US investment fund Eton Park Capital for $54 million. Latin Finance.

COLOMBIA LIFTS CAPITAL CONTROLS; PONDERS MARKET REFORM
June 15, 2006 -- Following the disastrous losses of the Colombian stock market in recent days, the government may consider amending regulation to avoid a repeat of the extreme drops experienced. On Tuesday, the government decided to lift capital controls on foreign portfolio investments in a bid to attract capital from abroad. The Colombian stock market has lost 39% of its value since the start of the year, with the greatest falls seen this month on concerns of imminent interest rate hikes in the US. Yesterday, Wednesday, the IGBC recovered to end the day up 6.52% on 6,562.28. Latin Finance.

IFC INVESTS IN INTERBOLSA
June 23, 2006 -- As part of its program to help broaden and deepen Colombia?s domestic securities market, the International Finance Corporation (IFC), the private sector arm of the World Bank Group, will provide a partial credit guarantee of up to $26.9 million to local brokerage firm Interbolsa on its inaugural peso-denominated bond issue of $89.6 million. The funds raised by the issue are to be used to reduce Interbolsa's reliance on commercial bank funding. The IFC has also agreed to buy an equity stake in the company of up 8%, for around $10 million. Latin Finance.

BRAZIL'S LULA WILL RUN AGAIN
June 25, 2006 -- Brazilian President Lula Inacio da Silva announced at the weekend he will run for a second term in office this October, promising to maintain economic stability and intensify his battle against poverty. Most polls predict he will handily beat his opponent Geraldo Alckmin, a former governor of Sao Paolo state. Latin Finance.

UNIVISION SOLD; TELEVISA LOSES BID
June 27, 2006 -- The consortium of Madison Dearborn Partners, Providence Equity Partners, Texas Pacific Group, Thomas H. Lee Partners and Saban Capital Group won the auction for the Spanish language media company, paying $13.7 billion, or $36.25 a share. News of the sale comes just days after marketwatchers were speculating that the company would take itself off the block following a disappointing, $35.75-per-share offer from the Grupo Televisa bidding party, which included backing from Cascade Investment and Bain Capital. PE Wire Week.

COLOMBIAN PENSION FUNDS OFFER US$285M FOR GAS DISTRIBUTOR
June 29, 2006 -- A group of Colombian pension funds bid $285 million for the company's main natural gas distributor, now called Transportadora de Gas del Interior (TCI). The new company springs from the sale of state utility Empresa Colombiana de Gas Natural, which operates 3,644 kilometers of gas pipelines. The sale is part of the Colombian government's privatization program. Latin Finance.

INDUSTRY & PEOPLE

"The lack of consisent, reliable and comprehensive data for venture capital and private equity in the region has impeded the industry's ability to successfully tell its story to investors and the media. In partnership with Thomson Financial, LAVCA hopes to bridge this knowledge gap for sustained industry growth."

"We believe that the increasingly professional fund managers in the region today are both open and hungry enough for quality data to make this project a success by participating."

-- Ramona DeNies, Research Director, Latin American Venture Capital Association (LAVCA).

THE UNFULFILLED NEED OF VC IN MEXICO
June 2006 -- The importance of supporting and encouraging a venture capital industry is integral for Mexico's economic development and financial stability. A paper recently published in the International Journal of Entrepreneurship and Innovation Management discusses the current venture capital situation in Mexico, analying Mexico's economic status, financial sector, current regulatory framework, changes in the industry, and how each correlate with the current and future Mexican venture capital industry. International Journal of Entrepreneurship and Innovation Management.

ABVCAP HOLDS EVENT ON BRAZIL INFRASTRUCTURE INVESTMENT, FUND GOVERNANCE
June 6, 2006 -- On May 31, 2006, ABVCAP, the Brazilian Private Equity & Venture Capital Association, hosted a special meeting at the Rio Othon Palace in Rio de Janeiro. The event focused on infrastructure investments and private equity fund governance in Brazil. The meeting had 61 individuals present, including 16 representatives from pension funds and Brazilian fund managers. ABVCAP.

PRESIDENTE DEL BMI DE EL SALVADOR ES NUEVO PRESIDENTE DE ALIDE
7 de junio de 2006 -- Nicola Angelucci, Presidente del Banco Multisectorial de Inversiones (BMI) de El Salvador, fue elegido como Presidente de la Asociación Latinoamericana de Instituciones Financieras para el Desarrollo (ALIDE), durante la celebración de su 36ª Reunión Ordinaria de la Asamblea General, realizada en La Habana, Cuba, el 25 y 26 de mayo. ALIDE es miembro de la Junta de Consejeros de LAVCA. ALIDE.

JAVIER LOIZAGA BECOMES EVCA'S NEW CHAIRMAN
June 15, 2006 -- The European Private Equity and Venture Capital Association (EVCA) has elected Javier Loizaga, CEO and managing partner of Madrid-based Mercapital, as association chairman for the period June 2006 to June 2007. Loizaga takes over from Sir David Cooksey, chairman of UK-based venture capital firm Advent Venture Partners. AltAssets.

GUEVARA NEW ITA DEPUTY ASSISTANT SECRETARY FOR SERVICES
June 29, 2006 -- U.S. Department of Commerce Under Secretary Franklin L. Lavin today announced that Ana Guevara has joined the Department of Commerce as the Deputy Assistant Secretary for Services in the International Trade Administration (ITA). The U.S. ITA is a member of LAVCA's Advisory Board member of the Latin American Venture Capital Association (LAVCA). Guevara will oversee and manage three separate offices, which develop trade policy, identify foreign market barriers and analyze trends affecting the domestic and foreign competitiveness for U.S. businesses in the service, tourism and finance industries. Her office provides technical support to the United States Trade Representative during trade negotiations. International Trade Administration.

EVENTS

15-17 de agosto de 2006 Buenos Aires Argentina	2006 FORO DE CAPITAL DE RIESGO CREARCIT Un espacio de encuentro de oportunidades, donde emprendedores argentinos presentan sus planes de negocios y requerimientos de financiamiento a la comunidad empresarial y de inversores.
September 20-22, 2006 Rochester, NY United States	2006 ANNUAL CONFERENCE OF THE NATIONAL ASSOCIATION OF SEED AND VENTURE FUNDS Learn more about innovation capital investing - and network at the annual conference of the U.S.' premier organization fostering innovation capital. The NASVF represents a broad network of private, public, and nonprofit organizations committed to building their local economies by investing and promoting investment in local entrepreneurs. Agenda items include: Fund Failures: Lessons Learned, Show Me the Money: Creative Strategies for Raising a Fund, Doing the Deals: Finding the Deals, Term Sheets, Managing the Tough Ones, Exits, and Creating Angel Networks in Fly-Over Areas.
September 26-27, 2006 New York, NY United States	THE 13TH ANNIVERSARY PRIVATE EQUITY ANALYST CONFERENCE
October 12, 2006 Washington, DC United States	LAVCA LP/GP ROUNDTABLE The Latin American Venture Capital Association (LAVCA) will hold a Roundtable to further the dialogue between LPs active or considering activity in Latin America and the Caribbean and GPs who manage funds within the region.
October 12, 2006 Washington, DC United States	2006 MIF VENTURE CAPITAL NETWORK MANAGERS' MEETING The 2006 Managers' Meeting of the Venture Capital Development Network of the Multilateral Investment Fund will be held concurrently with LAVCA's LP/GP Roundtable. The MIF VC Network Meeting is a network-exclusive event.
October 19, 2006 Ciudad México México	CONFERENCIA ANUAL DE AMEXCAP La Asociaión Mexicana de Capital Privado (AMEXCAP) se realizará en coordinación con Nacional Financiera su conferencia anual.
November 30 - December 1, 2006 London United Kingdom	2006 EMERGING MARKETS PRIVATE EQUITY FORUM
February 6-7, 2007 Miami, FL United States	9TH ANNUAL ECONOMIST CONFERENCE ON LATIN AMERICAN PRIVATE EQUITY Key issues to be examined at the 2007 event include: The impact of recent Latin American elections on financial markets Funds established in 2006 and a prognosis for 2007 Opportunities for private equity investment in the American Hispanic market The impact of recent Latin American elections on financial markets Establishing effective valuation guidelines and performance benchmarks
March 2007 Guatemala City Guatemala	LAVCA 2007 ANNUAL SUMMIT
March 19-21, 2007 Guatemala City Guatemala	2007 ANNUAL MEETINGS OF THE IDB/IIC BOARDS OF GOVERNORS