BGCF: An investment fund to support SMEs in Brazil

Bozano Investimentos is a fund manager which came about through the merger of 3 investment companies in 2013: BR Investimentos (BRI), Mercatto and Trapezus. Bozano Investimentos manages some BRL 4bn of assets and operates in two segments: private equity and asset management (hedge funds, public equity and fixed income).  

The private equity activity is itself subdivided into two activities with two separate teams: funds for education and funds for services, social sectors and consumer goods. The manager is a Brazilian pure play in its private equity activity. 

PROPARCO has invested USD 12m in Bozano Investimentos Growth Capital Fund (BGCF), whose investment strategy focuses on financing the growth of medium-sized family-owned companies. 

The fund will target the sectors of consumer goods, distribution, health and services, with a focus on logistics. The investments will target companies with a local footprint and will be made exclusively in BRL. 

The fund mainly targets minority positions (20-49%), but may also take majority positions when there is no actual controlling shareholder and alongside a sound and committed management team.

The project has a number of economic and social benefits: 

• Promoting SME development, by offering long-term subsidiary financing to complement an inadequate range of bank products, as they are only available to the major players; 
• Supporting the emergence of leading groups in Brazil in focus sectors for AFD Group, such as health (hospital platform) and education, in geographical areas neglected by equity investors. The extension of three hospitals has already been financed and other projects related to the health sector are currently being analyzed (medical laboratories, blood bank), in order to meet growing demand for high-quality health services in Brazil. These projects are expected to create 174 additional beds and provide healthcare to some 3 million patients a year, mainly from the middle classes. 

Another investment made concerns a chain of supermarkets offering fresh products and targeting lower-middle or low-income populations. 

• Contributing to employment and training for local communities. The project is expected to help create or maintain over 15,700 direct and indirect jobs, 54% of which will be held by women.