The National Bank for Economic and Social Development (BNDES) approved the subscription of up to R$ 300 million in the ALAOF V Brasil equity investment fund, which will focus on medium-sized companies as a priority investment. The amount effectively applied by the BNDES is limited to 25% of the total subscribed in the fund, which may reach, with the participation of other institutional investors, a total of up to R $ 1.2 billion. It is estimated that the fund should support the business of four to six Brazilian companies, with the potential to generate jobs in the country - which reinforces the importance of yet another channel of access to resources during the economic crisis resulting from the new coronavirus pandemic.

Managed by ALAOF do Brasil, manager of the ACON Investments group in Brazil, ALAOF V Brasil was one of four private equity funds selected through a multisectoral call made by BNDES in December 2018. The manager counts on its institutional investor base with international financial institutions and development agencies, among others, and has focused its investments on medium-sized companies from different sectors that have good growth potential, but that require capital to leverage business.

The fund must select between four and six promising companies that need resources to gain traction. In addition to the financial contributions - which should vary between approximately R $ 80 million and R $ 300 million in each business -, the manager will add its expertise, influencing the main operational, financial and strategic decisions of the companies, in order to generate more value for them. The manager will also seek to implement international levels of compliance, transparency and socio-environmental responsibility in the supported companies.

The fund - The fund should last for 10 years - with the possibility of an extension for two more - and the investment period can last between five and seven years. After that time, the fund will have a period dedicated to managing and eventually disposing of its interests, remunerating the BNDES and the other shareholders. The fund will seek to invest mainly in medium-sized companies from different sectors, such as health, education, pharmaceutical, consumption and retail, technology and waste management, among others.