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Business Focus: Argentina, Panama and Mexico
Be it a manufacturing facility, a winery or a small hotel off the beaten path, Investments in onshore assets in Latin American countries can have widespread appeal to foreign investors. In addition to offering the possibility of a good return on investment, such ventures may also provide intangible benefits, such as being the possible means of supporting a life abroad, and can also form part of a larger asset-diversification/risk-mitigation strategy.
This brief compares basic entity formation and banking practices among three Latin American countries; Argentina, Mexico and Panama, noting some special requirements
and features of each jurisdiction. The description of each jurisdiction reflects the input of attorneys from several prominent local law firms.
Brazils improving Corporate Governance
From the mid 1990’s until 2000 the Brazilian equity market was characterized by poor corporate governance, weak enforcement, little minority investor protection, shallow liquidity and low valuations. This challenging situation provoked de-listings and forced a migration of companies seeking the greater protection that the NYSE could offer. Fast-forward to the period between 2004 and 2007 and the scenario had changed completely, with a record number of IPO’s coming to the market raising a total of US$45 billion from foreign and domestic investors. So how can such a turnaround be explained? Alternative Latin Investor was fortunate to attend the recent alternative investment summit in Sao Paulo, Brazil and Jose Luis Osorio from Jardim Botanico Partners shed some light on how investor protection legislation has evolved in the recent past
Multimercado:Funds Go Global
Hedge fund regulations in Brazil provide local funds with global access
As Brazilian hedge fund managers prepared to take advantage of the long-awaited issue of a resolution that would allow them to access offshore markets in 2008, the global financial crisis hit just in time to set back their hopes. Indeed, local fund managers had waited years for the Commissão de Valores Mobilários (CVM), Brazil’s regulator of investment funds and capital markets, to issue Instructions 450 and 456, which provided long-awaited access to international financial instruments. Essentially, CVM 450 and 456 allowed multimercado funds (the local term used to describe onshore hedge funds) to place up to 20% of fund assets in investments abroad that are similar to those traded domestically by the fund.
Trading in these securities, which was long delayed due to disputed language in the original legislation, was an important step forward for the Brazilian hedge fund market. The industry had benefited from a prolonged bull run in emerging markets, increased visibility of BRIC (Brazil, Russia, India and China) strategies and bigger allocations from global managers. Brazilian managers viewed the approval of CVM 450 and 456 as an important step toward continued growth within the region, and the regulations allowed them to take advantage of increased interest among global investors in Latin American exposure
Finding Your Financial Freedom in Latin America
When checking out investments in Latin America, don't miss intangible benefits that might not contribute directly to the bottom line, but that could make you freer, wealthier and happier as a person. Peter Macfarlane investigates the hidden benefits of Latin Investing such as tax benefits, asset protection and even a new passport...
For most investments, the bottom line is of course the most important. But one of the very attractive advantages of alternative investments is that they are not just digits on a screen. Frequently, they also carry significant fringe benefits that, while not contributing directly to the bottom line, play an important role in the investment itself and in the investor's longer term strategic planning.
These fringe benefits may be pure fun, or perhaps social status - like inviting friends over to sample the latest vintage from your own winery. But as the traditional financial system remains far from predictable, and the outlook for 2010 remains gloomy, you might be surprised to learn that savvy investors are turning in droves to alternative Latin-American investments as a conservative 'safe haven' for serious asset protection purposes.
