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LAC VC/PE Leaders Debate Competitiveness at LAVCA 2006 Summit

1 April 2006

Belo Horizonte, MG, Brazil April 1, 2006 – More than 90 international fund managers, public and private sector investors and industry professionals convened today in Belo Horizonte, Brazil, to debate Latin America’s competitive advantage for venture capital and private equity.

The 4th Annual Summit of the Latin American Venture Capital Association (LAVCA) drew representatives from more than 60 organizations including approximately 30 fund managers and 10 institutional investors.

“As anticipated, the Summit provided me with the opportunity to interact and share experiences with the most prevalent private equity GPs and LPs for Latin America,” said Patrice Nogueira Baptista Etlin, Latin America Director for Advent International.

The Summit theme, Defining a Competitive Advantage for Venture Capital and Private Equity in Latin America and the Caribbean, was developed through panels on fundraising, regulatory environment, competitive sectors and enhancing returns through corporate governance.

“The combination of issues touched on the four most critical pieces without redundancy,” said Claudia Fan Munce, LAVCA Board Member and Managing Director for IBM’s Global Venture Capital Group. “The panels gave a good overview of what is needed for the industry to evolve.”

Summit participants representing more than 17 countries explored key competitive advantages for Latin America and the Caribbean. Advantages identified by participants included the region’s favorable buy-in valuations, growing public equity markets, a strong commodities sector, a potentially shorter J-curve and limited competition with other emerging markets.

“Latin American companies are indeed competing in the global economy,” said Julio Lastres, LAVCA Board Member and Senior Managing Director for Darby Overseas Investments, Ltd. “We are over a decade into the region’s open economic policies, and we’re already seeing the fruits, as international investors and multinational firms are increasingly becoming aware of the value they represent.”

Participants noted that competitive advantages exist in markets throughout the region in addition to Brazil and Mexico, the regional heavy hitters with which more emerging markets investors are familiar.

According to Erik Peterson, LAVCA Board Member and Aureos Capital Central America Managing Director, Central America’s “proximity to the US gives it a competitive edge in sectors such as near shore business process outsourcing, high value added manufacturing, tourism and leisure oriented real estate.”

Participants also examined current challenges negatively impacting the region’s competitiveness.

“Clearly the prospects of a fund to raise capital would be positively impacted by a stronger track record for the region,” said David E. Thomas, Chair of LAVCA and Managing Director for Intel Capital Latin America.

Challenges identified by participants included regional economic volatility, the relative obscurity in which current players operate, a poor industry track record as well as perceived political instability, which some participants felt could potentially threaten investor confidence.

“Latin America’s private equity investors need to draw more attention to their successful investments,” said Álvaro Gonçalves, Managing Partner & Executive Director of Brazil’s Stratus Investimentos. “The region’s share of capital invested in emerging markets is significantly underrepresented compared to its attractive investment climate.”

Participants at the 4th Annual Summit of the Latin American Venture Capital Association (LAVCA) also witnessed the public launch of the 2005 Scorecard on the Private Equity and Venture Capital Investing Environment in Latin America and the Caribbean, developed by the Economist Intelligence Unit (EIU) for LAVCA and the Venture Capital Development Network of the Multilateral Investment Fund (MIF). This innovative tool ranks 11 LAC nations against a matrix of factors impacting VC/PE investing. The 2005 Scorecard is available for download via LAVCA’s website.

“Our inaugural Scorecard reveals the potential for growing the VC/PE industry in the region,” said LAVCA Board Member and Summit emcee Christina Kappaz. “Though fundraising for the region has increased over the past three years, further improvements are clearly needed to enhance growth. This tool will serve as a comparative guide to encourage reform and track changes over time.”

2006 Summit participants included senior representatives from Intel Capital, Darby Overseas Investments, IBM, Latin America Enterprise Fund Managers, EMP Global, Aureos Capital, Actis Partners, Advent International, Stratus Investimentos, FIR Capital, Jardim Botânico, FMO, IFC, OECD, Norfund, MIF, IDB, Mexico’s Nacional Financiera, Brazil’s Finaciadora de Estudos e Projetos (FINEP), and Peru’s ProCapitales. The Summit keynote was delivered by Ricardo Malavazi Martins, Director of Brazilian pension fund Petros.

The event was hosted by the Corporación Andina de Fomento (CAF) with gold sponsorship from BDO Seidman, Deloitte, Ernst & Young, KMPG, Grant Thornton and PricewaterhouseCoopers.

LAVCA’s Summit is held annually in conjunction with the Annual Boards of Governors Meetings of the Inter-American Development Bank (IDB) and Inter-American Investment Corporation (IIC). The 2006 IDB/IIC Meetings took place in Belo Horizonte, Brazil.