How to Encourage Greater Private Equity Investment in Latin America

Development of Non-Bank Financial

Institutions in Latin America

December 5, 2002

J. Scott Swensen

An IntroductionDeutsche Bank

Total assets exceeding €918 billion (1)

Market Capitalization of €49 billion (1)

Comprehensive range of investment banking services

Asset management business has €1 trillion in assets

DB Capital Partners, Inc.

Deutsche Bank’s private equity platform

Offices in U.S., Europe and Asia

Over 100 professionals

17 year history of private equity investing

Approximately €10 billion in private equity business

Investment manager for Latin Power Funds

As of December 31, 2001. (1)

Latin Power FundsScudder Latin American Power Fund I

Formed 1993

$100 million of capital

7 projects in 5 countries

Scudder Latin American Power Fund II

Formed 1998

$157 million of capital

9 projects in 7 countries

Latin Power Fund III

Illiquid investments in unlisted equity securities

Can be minority or majority position

Can be provided by strategic investors or funds

Different types:– Venture Capital

– Growth

– Buyout

– Mezzanine

– Vulture

What is Private Equity?

Who Invests in Private Equity Funds?

Other

Banks

Individuals

Endowments &Foundations

InsuranceCompanies

Pension Funds

Why Would a Developing Country Want to Encourage Private Equity Investors to Invest in Their Country?

Provides capital that is not available locally

Provides growth capital to create jobs

Stable capital vis-à-vis portfolio investments

Good timing match with pension fund and some insurance company liabilities

What Do Private Equity Investors Look For?

Politically stable & economically growing country

Transparent & stable environment:– Legal– Taxation– Regulation

Ability to exit investments

Ability to repatriate capital

Manageable currency risk