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LAVCA Interviews Chairman of Peru’s ProCapitales

28 April 2005

Peruvian Promoter of Capital Markets Development Says Improving Legal and Regulatory Climate a Draw for Investors

April 28, 2005 — The recent establishment of an influential new capital markets promoter in Peru confirms many investors’ sense that the Andean nation is emerging as a potentially attractive candidate for private equity and venture capital. The four-year old Asociación de Empresas Promotoras del Mercado de Capitales, known as ProCapitales, has grown in membership and scope to gain significant traction with both the public and private sector in Peru.

With a tripling of capital invested in Andean countries over the past year and renewed interest in raising funds specifically dedicated to the region, ProCapitales’ base of international support has also been growing. The association now counts among its backers such major development finance institutions as the Corporación Andina de Fomento (CAF) and the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB).

Currently the association is hard at work collaborating with the Peruvian government, Congress and private sector representatives to improve the tax system for venture investing.

“ProCapitales is making progress toward improving the regulatory and cultural framework for venture capital in Peru,” said Christina Kappaz, Interim Executive Director of the Latin American Venture Capital Association (LAVCA). “They provide an excellent example of the type of promotional entity that is crucial to developing the industry in Latin America on a national level.”

ProCapitales has recently accepted a seat on LAVCA’s Advisory Board, a move that paves the way for increased synergy in the advocacy efforts of the regional and national associations, as well as collaboration in producing local events, research, and training materials. According to Ms. Kappaz, this partnership strengthens an already productive relationship.

“ProCapitales has supported such LAVCA initiatives as our successful 2004 Policy Seminar in Lima,” said Ms. Kappaz. “We are very pleased to be working more closely with ProCapitales as a member of the Trade Association Committee within our Advisory Board.”

LAVCA recently had the opportunity to interview Enrique Oliveros, Chairman of ProCapitales, on ProCapitales’ recent activities and perspective on Peru’s evolving environment for venture investing.


LAVCA: When and how did ProCapitales come into existence in Peru?

Enrique Oliveros: Poor development of Peruvian capital markets led to the creation of ProCapitales in July of 2001. Several private sector representatives had joined efforts to address the lack of new issuers and investment instruments and the insufficient development of the local stock exchange. These notable players decided to create an institution in charge of promoting capital markets development. They created ProCapitales as a non-profit association responsible for studying Peruvian law, regulation and services related to capital markets, as well as the role of the private and public sector and especially the participation of the government as the industry’s supervisor and regulator. ProCapitales’ major objective is to develop Peruvian capital markets and promote private investment. In the beginning, around 15 companies were associated with ProCapitales. Today we have over 55 active members, including issuers, law firms, consulting firms, stock brokers, pension funds, fund managers, banks, insurance companies and auditors.

LAVCA: What is your background and how did you come to be involved with ProCapitales?

EO: I am an investment banker and have been involved with ProCapitales since its incorporation, initially through Santander Investment, where I used to work, and currently with Latin Pacific Capital (formerly Flemings Latin Pacific), a regional investment bank.

I was elected Chairman of ProCapitales at the last General Assembly, held in December of 2004. I was previously Director of ProCapitales due to my work with Santander Investment.

Before joining Latin Pacific Capital, where I am in charge of all Corporate Finance activities, I held several positions in financial and capital markets, both in private and public institutions. Previously I served as Chairman and General Manager of Santander Investment S.A.B., a very important brokerage house in Peru, and Director of Investment Banking at Peru’s Commission of Promotion of Private Investment (now called ProInversion). I have also been President of SUNASS (Peru’s water and sewage regulator), among other positions.

LAVCA: What is the association doing these days?

EO: ProCapitales is the executing agency of the Invertir Program, a project with non-reimbursable funds from IDB/MIF, which has a mission to support capital markets development and promote venture capital funds targeting small and medium companies in Peru.

To reach this goal, Invertir carries out activities in three component areas:

(i) We provide support for enabling a regulatory and legal framework for capital market development. Work in this area includes the preparation of special studies on relevant issues being debated in government and Congress and using communication and dissemination instruments, such as a monthly magazine (“Invertir”).

(ii) We select enterprises and provide them with customized training and advisory services in strategic planning and corporate governance. We also give them the opportunity to participate in venture capital forums to obtain direct financing through the investments of venture capital funds through their share capital.

(iii) We promote venture capital investment and support the development of the venture capital fund industry in Peru. Our work in this area tries to develop local professional capacity in the industry, promoting the use of corporate governance practices among fund managers, especially through the implementation of training programs to strengthen fund management capacity.

In addition to the Invertir Project, ProCapitales has internal committees such as the very active Committee for Legal and Regulatory Affairs, in which law firms and representatives of legal departments of member organizations analyze Peru’s legal and regulatory framework and prepare legal proposals for Congress and other governmental institutions.

ProCapitales’ Fund Managers’ Committee works to generally strengthen the framework for investment funds to enable these industries to better develop and contribute to economic growth and stability.

Our Corporate Governance Committee works very hard to promote best practices among Peruvian companies. Nowadays, this Committee is focused on the design of a corporate governance contest among Peruvian companies, with the objective of rewarding the commitment of companies that have implemented these practices and are contributing to greater transparency in capital markets and therefore better investment possibilities.

The Association also publishes an electronic weekly newsletter which addresses the principal news of the week related to capital markets, private investment, regulatory issues and the main economic, financial and legal issues in Peru.

An additional activity of ProCapitales is the organization of at least one forum per month. Our forums have an average attendance of around 150 participants from public or private sector entities. Our forums explore themes related to capital markets, financial and pension systems, private investment, and other topics, and are always facilitated by outstanding specialists and a panel of industry experts.

Furthermore, the Corporación Andina de Fomento (“CAF”), under its initiative to promote the implementation of corporate governance practices, has appointed ProCapitales as its counterpart in Peru for a project with the objective of implementing best practices throughout the Andean region. This project includes the preparation of an action plan for disseminating corporate governance concepts and principles in the Andean region, the preparation of an Andean Code of Corporate Governance, and the implementation of a pilot program on corporate governance practices within a local company.

ProCapitales has also been appointed the executing agency for another project financed by CAF, which calls for the diffusion of capital market matters and the strengthening of corporate governance practices through forums and research initiatives.

LAVCA: How would you characterize the private equity and venture capital industry today in Peru?

EO: Until now, the venture capital industry in Peru has developed insufficiently. There are very few venture capital funds operating in Peru, and none of them are public funds. This is due to the lack of an appropriate tax system for this type of fund. There is also a significant lack of knowledge about the industry and venture capital culture among Peruvian companies.

Nevertheless, the venture capital industry in Peru is showing some progress. The tax system has been improved. Though there are still important adjustments to make in the legal and regulatory framework, the Peruvian government and the private sector, including ProCapitales, are working hard on this issue.

Peruvian corporate culture is also changing. Venture capital and private equity investors have increased opportunities to invest their money for shareholder participation, even in small and medium enterprises. Corporate governance principles are gradually gaining a better reception from Peruvian companies, as is the idea of introducing new shareholders.

As we have said before, ProCapitales is a very active participant in these developments. We expect to have successful results with the Invertir Project in stimulating the creation of more venture capital funds and a more reliable market for private equity and venture capital investors.

LAVCA: what are the benefits of Peru as a destination for venture capital and private equity?

EO: An important aspect is a notably improved tax system. Before last October, investment funds had to pay income taxes on the profits the fund generated, a practice that obviously didn’t stimulate the formation of investment funds. Under Peru’s new legal regime, shareholders are the ones that pay income taxes for their profits.

It is important to note as well that profits obtained from dividends, interests and capital gains through any kind of transaction done at centralized stock exchange mechanisms are now exonerated from paying income and value-added taxes, so private equity investors have incentives to invest in Peruvian papers.

In addition to the tax system benefits, which still have to be improved to allow the venture capital and private equity industries to consolidate, we must mention that many local small and medium enterprises are showing both impressive economic results and the implementation of good corporate governance practices.

LAVCA: How can LAVCA and ProCapitales work together to improve the industry in Peru?

EO: As a new member of LAVCA’s Advisory Board, we hope to work generally with LAVCA to promote venture capital, private equity investment and best practices in corporate governance. In Peru, we are engaged in accomplishing these goals through the preparation of studies, lobbying efforts, organization of forums, development of research studies and the publication of newsletters and magazines that contribute with capital market education. In the future we hope to work together with LAVCA to implement different local and cross-border projects and to realize forums in Peru and the Andean region.

LAVCA: What is the long-term vision of ProCapitales?

EO: The long-term vision of ProCapitales is to be recognized as the leading institution in promoting private investment and capital markets development in Peru and the region.

To achieve this vision, the Association promotes the establishment of a stable legal framework, a market economy and private property rights, as well as the creation and development of new investment vehicles. ProCapitales is dedicated to fomenting access to capital markets for new issuers and strengthening the private pension system, as well as to promoting good corporate governance practices among Peruvian corporations and spreading knowledge of capital markets throughout the entire country.



LAVCA’s mission is to promote the growth of the venture capital and private equity industry in Latin America through research, education, networking, best practices, and the advocacy of sound public policy. LAVCA is a not-for-profit trade association serving a core membership of venture capital and private equity fund managers.

For more information about LAVCA, please visit

For more information about ProCapitales, please visit

Ramona DeNies
Communications Manager
[email protected]

Cayetana Aljovín
General Manager
[email protected]