Legal Insights From Brazil to Start Your Week
What you will be reading in this issue:
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1. Governance | 5 Key Agenda for Medium and Large Brazilian Companies in 2024
2. Labor | 5 Actions to Mitigate the Risk of Psychologial Diseases Being Recognized as Occupational Ones
Governance | 5 Key Agenda for Medium and Large Brazilian Companies in 2024
Brazilian companies that we have seen grow, innovate and generate value in different segments of Brazilian economy have in common strategic attention to medium and long-term funding, governance, talent attraction and M&A opportunities.
The factor below apply to companies in all major sectors in Brazil, including agribusiness, technology, manufacturing, finance, energy, and others.
Companies that want to grow in 2024 should consider the following 5 themes in their strategic plans:
- Focus on Attracting Structured Financing in Brazilian Reais: The Brazilian capital market for fixed income credit is closer than ever to medium and large companies, but still few are aware of the importance to create relationships with local financial institutions, funds, family offices and other medium and long-term capital financiers.
Even so, agribusiness companies issued more than BRL100 billion in Agribusiness Receivables Certificates (CRA) so far in 2023, acquired by funds, family offices and other investors, to raise medium to long-term resources (5 to 10 years).
Likewise, companies in the real estate sector issued Certificates of Real Estate Receivables (CRI) in high volumes to finance projects and costs of projects already built, with terms of 5 to 10 years.
Commercial Notes and Debentures are also medium and long-term funding options for companies.
- Look at Obtaining Foreign Funding From Foreign Banks and Funds: Brazil’s participation is still irrelevant in international trade, with a share of close to 2% of global trade volume.
Even so, agricultural, industrial and technology companies export commodities, value-added products and services that generate receivables in dollars and other hard currencies that can be financed by foreign funding.
There are several foreign financial institutions, trading companies, funds, family offices and investors that finance exports of Brazilian companies, via export prepayment lines, direct loans, draft (international duplicate discount), among others, in a volume that exceeds US$50 billion annually.
Companies should seek these financing channels as another funding alternative, especially in hard currency.