Sovereign Wealth Fund Institute

According to the Wall Street Journal, “Brazil’s federal sovereign wealth fund and the BNDES and Caixa Economica Federal state-controlled banks will be allowed to participate in the planned capitalization of state-controlled oil company Petroleo Brasileiro (PBR, PETR4.BR) later this month, according to a decree published by government in the country’s federal register Thursday.

Under the decree, BNDES National Development Bank and the Caixa Economica Federal savings and loan bank will be allowed to sell or exchange up to 217,395,982 common shares of Petrobras, as the company is known, with the country’s sovereign wealth fund, which is managed by the state-controlled Banco do Brasil. Later this month Petrobras plans to sell approximately 3.17 billion new shares in a public offering as part of its effort to fund development of offshore oil fields discovered in 2007 off the country’s southeast coast. The share offer is seen raising upwards of 111 billion Brazilian reals ($64 billion) for the company.  Following announcement of the share offer last week, Petrobras said the government and its financial units planned to buy at least BRL74.8 billion of its shares. Brazil’s government currently owns 30% of Petrobras’ total shares and more than 50% of its voting shares.”

Read more: Wall Street Journal

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According to Reuters, “Hassad Food, owned by Qatar’s sovereign wealth fund, plans to acquire a sugar project in Brazil, the state-run Qatar News agency said, citing the firm’s chairman.

Qatar, like other Gulf states, imports the majority of its food requirements, and securing future food supplies is seen as a priority by the government.

The acquisition in Brazil is expected to take place in two months time, Nasser al-Hajri told QNA, giving no further details of the project.

Around 70 percent of the sugar is planned to be shipped to Qatar for domestic use, while the remaining 30 percent will be used to produce bio-fuels, QNA said.”

Source: Reuters

According to the Kuwait News Agency, “Kuwait and Brazil agreed on establishment of a joint investment company, said Board Member of Kuwait Chamber of Commerce and Industry (KCCI) Sayer Al-Sayer here.

Al-Sayer said late on Saturday, after a banquet held by Brazil’s President in the honor of His Highness the Prime Minister of Kuwait Sheikh Nasser Al-Mohammad Al-Sabah, that the two countries agreed on preparing “an initial study for the establishment of the company.” He said the aim of the company will be to boost economic relations between Kuwait and Brazil, adding that it would also have positive effect on trade exchange between Kuwait and Brazil. Brazil is rich in oil, agricultural resources and livestock, he pointed out, noting that the country is due to host several crucial international events, namely international Olympic games and the World Soccer Cup — events that will contribute to reviving the national economy and impact in particular on the private sector, he noted.

The two countries will form a joint committee to prepare studies on the issue, he said, alluding to the accord. As part of His Highness the Prime Minister’s tour in Latin America, th KCCI is seeking to stress economic ties with the regional counties. Al-Sayer is heading KCCI’s delegation accompanying His Highness the Prime Minister.”

Read more: KUNA Press Release

According to the Wall Street Journal, “The Brazilian sovereign wealth fund will buy 66.5 million shares to be offered by state-run Banco do Brasil SA, Latin America’s biggest bank by assets, through bank’s primary and secondary offering of shares on the Sao Paulo Stock Exchange, BMFBovespa.

Banco do Brasil said, in a statement late Wednesday, that Brazil’s sovereign wealth fund, Fundo Soberano do Brasil, will acquire its shares via a special fund known as FFIE.

Earlier this month, Banco do Brasil said it will offer a total of 356.85 million shares, with 286 million shares through a primary offering and 70.8 million shares via a secondary offer.  The operation could raise about 9.77 billion reais ($5.46 billion) based on Banco do Brasil’s closing price of BRL27.39 on Wednesday.

Investors can reserve shares from June 21 through June 29. Trading is expected to begin July 2.  With the acquisition of shares to be made by the sovereign wealth fund, the federal government will keep its control on Banco do Brasil.

Brazil created the sovereign wealth fund in late 2007 with the aim of reinforcing public sector savings and funding projects of strategic interest abroad.”

Read more: Wall Street Journal

According to the Amyris Press Release, “Amyris Biotechnologies, Inc. announced today that Temasek Holdings has invested $47.8 million into the company. Amyris intends to use these funds to support commercial plant design and construction activities as well as ongoing operations in the U.S. and Brazil.

“We are privileged to welcome Temasek as a significant investor, and appreciate having them join us as we look to commercialize and scale our renewable fuels and chemicals,” said John Melo, chief executive officer of Amyris.

Amyris has secured $244 million in private funding since inception in 2003, including funding directly into Amyris Biotechnologies and into its subsidiary, Amyris Brasil S.A. Other Amyris investors include Kleiner Perkins Caufield & Byers, Khosla Ventures, TPG Biotechnology, Votorantim Novos Negocios, Advanced Equities Inc., DAG Ventures, Grupo Cornélio Brennand, Naxos U.K., The Westly Group, and Stratus Group.”

read more: Amyris

According to Bloomberg, “China Investment Corp., the nation’s sovereign wealth fund, has had “early” talks for direct investments in Brazil and Mexico, Chairman Lou Jiwei said.

The sovereign wealth fund plans to increase direct investments this year and prioritizes such investments in developing markets, Lou said at a financial forum in Hong Kong today. CIC plans to be an “active, minority” shareholder in companies, instead of being involved in day-to-day operations, he said.

“In developing countries, the public capital markets are not as deep as developed countries,” Lou said. “We’re more interested in direct investments in developing countries.”

CIC, which held almost $300 billion in assets at the end of 2008, last year accelerated investments in resource-related companies, from U.S. power producer AES Corp. to Russia’s Nobel Oil Group, to hedge against rising inflation. Brazil is the second-biggest exporter of iron ore, while China is the largest buyer of the raw material.”
read more: Bloomberg

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According to Business 24-7, “Abu Dhabi Investment Authority (Adia) is investing in two towers in Rio de Janeiro, Brazil. Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan, who is on a visit to the South American nation, inspected the construction progress of the towers. Earlier in Brasilia, Sheikh Abdullah held talks with Minister of External Relations of Brazil Celso Amorim and discussed means of enhancing co-operation in areas of economy, trade and investment between the two nations. The UAE side called for concluding bilateral agreements on avoidance of double taxation and encouragement and protection of investment. Arrangements for the upcoming visit of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and Ruler of Dubai, to Brazil next year were also discussed.”

read more: Business 24-7

According to the Press Release, “Pursuant to CVM Instruction 358 of January 3, 2002, Cyrela Commercial Properties S.A. Empreendimentos e Participações (“CCP”), a commercial property development and leasing company with shares traded on the São Paulo Stock Exchange (BOVESPA) under the ticker CCPR3, informs its shareholders and the market in general that, on July 7, 2009, it entered into an agreement establishing the basis for a joint venture with BRCOMPROP DEVELOPMENT JV PRIVATE LIMITED, an affiliate of GIC Real Estate, the real estate investment arm of the Government of Singapore Investment Corporation (“GIC Real Estate”) and CPPIB US RE-A, INC, subsidiary of the Canada Pension Plan Investment Board, (“CPPIB”), with the purpose of acquiring, holding, developing, building, leasing, managing and selling assets in the retail, industrial and office real estate segment in Brazil (“Joint Venture”).

The investments of GIC Real Estate and CPPIB will be made through CCP18 DE MASTER LIMITED PARTNERSHIP, a company especially set up for this purpose pursuant to the laws of the state of Delaware, United States of America, with CCP Asset Management LLC, a whollyowned subsidiary of CCP, as its general partner (“Company”) being responsible for the allocation and management of the funds committed. The Company, in turn, will directly or indirectly invest, jointly with CCP, in specific purpose companies headquartered in Brazil, which will invest in retail, industrial and office real estate properties.

The investments committed by the parties to achieve the objectives of the Joint Venture total US$ 400 (four hundred) million and will be made in the ratio of 25% by CCP, 37.5% by GIC Real Estate and 37.5% by CPPIB.

This Joint Venture aims to combine CCP’s expertise in the Brazilian commercial real estate markets (office buildings, shopping centers and industrial facilities), with GIC Real Estate’s and CPPIB’s global investment expertise.

This partnership underlines CCP’s commitment to the Brazilian real estate market and its confidence on the growth prospects for the commercial property sector in the country.

read more: Cyrela Commercial Properties S.A – Press Release

Bloomberg reports, “Brazil may tap its 15.8 billion real ($8.6 billion) sovereign wealth fund next year to help finance spending without widening the budget deficit, Planning and Budget Minister Paulo Bernardo said.

Tax collections may lag behind an expected economic recovery in 2010 because some companies have ways to postpone taxes on earnings until the following year, Bernardo said during an interview in Brasilia. Tax revenue fell 1.9 percent in the first half of 2009 from a year earlier.

‘If tax collection is not as good, we will use the sovereign fund,’ Bernardo said. ‘I don’t think we will need the sovereign wealth fund this year. Next year, we may.’

Drawing on the fund will allow President Luiz Inacio Lula da Silva’s administration, amid an election year, to avoid cuts to spending should economic growth or tax revenue falter. Lula’s administration will also have room to extend tax breaks granted this year to boost the recovery if needed.”

read more: Bloomberg

Wall Street Journal reports, “Alan Thompson, managing director for Latin America at Temasek Holdings, Singapore’s sovereign wealth fund, agreed that Brazil’s strong financial system is an important factor in the country’s strong economic growth potential. Not a single bank failure has occurred in Brazil since September 2005 when Banco Santos was closed in what Brazilian bank regulators called an isolated event.

‘Over the last two years, we recognized that the economic world order is changing,’ said Thompson, who said Temasek has made several investments since establishing a presence in Brazil last year.

Thompson also said Brazil’s moderate inflation of 4% was the result of well-developed institutions that drive monetary policy. He cited stable fiscal policy as the reason Brazil has become a net creditor to the rest of the world and accumulated $200 billion in foreign exchange reserves. The global financial community has recognized Brazil’s new place in the world. Standard & Poor’s upgraded Brazil’s sovereign debt to investment grade last year. Foreign investors poured in a record $45 million of direct investment in 2008. “

read more: Wall Street Journal

According to Reuters, “Brazil will not tap a new sovereign wealth fund for key investment projects this year even though the economy may miss an official 2 percent growth forecast, Planning Minister Paulo Bernardo said on Wednesday.

‘It is more likely that we use (the sovereign wealth fund) next year but we still haven’t defined this. This year we will not use it,’ Bernardo told the Reuters Latin American Investment Summit in Brasilia, Brazil’s capital.

The fund was created last year and was originally aimed to help finance the expansion of Brazilian companies abroad.”

read more: Reuters

Wall Street Journal reports, “The lower house of the Brazilian Congress on Tuesday night approved legislation making an existing Sovereign Wealth Fund into a permanent fixture. The Chamber of Deputies voted 274-102 to approve a government bill making the fund permanent and approving an initial total for it of 14.2 billion Brazilian reals ($6.5 billion). The Sovereign Wealth Fund was created late last year by Brazilian President Luiz Inacio Lula da Silva by a temporary executive order. For the fund to become permanent it requires congressional approval. Following Tuesday’s Chamber of Deputies vote, the bill will move on to the Brazilian Senate, where approval is also expected.

The Sovereign Wealth Fund is equal to approximately 0.5% of Brazil’s gross domestic product. The idea behind it is to create and maintain the fund from public revenues during periods of economic growth. Money locked up in the fund can then be spent during periods of economic downturn.

Currently, Brazil is facing the prospect of zero economic growth in 2009 after posting an expansion of 5.1% in 2008. So far, the administration of President Lula has not indicated any intention of unlocking the Sovereign Wealth Fund for spending this year. However, many economists and business leaders have said the government should spend some of the fund’s money in order to stimulate Brazil’s economy. “

read more: Wall Street Journal

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