EADS head of defense and security, Stefan Zoller said the impending implementation of Austerity measures in Europe is posing a serious risk for the aviation industry given the fact that most European governments will be cutting down their overall spending in a move targeted at reducing their budget deficits. That the resultant cuts will affect the industry is no news, Zoller said, adding that what the industry needed are measures to mitigate the effects and increased international growth through investments in places with money certainly comes as a viable option, reiterated Zoller.

He believes that Brazil amongst the others present such places “where there is money,” as he put it. According to the company, the markets it found most viable for expansion of their business include Brazil that had a military spending increase of about 23% and India that had a defense budget increase of 6%. On the other hand, estimates have placed the Middle East’s spending in defense at a staggering $100 billion by the year 2014.

As such, EADS will be hoping for increased opportunities in terms of security contracts in Brazil ahead of the 2014 World Cup and the 2016 Olympics to be held in the country, whereas in India, there are opportunities for huge military aircraft orders and the Middle East might be viable in border security deals in Saudi Arabia.

Thus, for the long run, EADS is planning to accrue much of its revenue from these international markets such as Brazil, with the budget cuts being behind the motivation to accelerate the long planned international investments increase. Zoller reiterate the company’s plan to increase its international presence in such markets but the plans had been slowed, however, with the pending cuts, he reiterated his belief for a radical shift that focuses on international expansion.

He further said that doing business with Brazil and the other markets had become urgent, rather than just being a matter of getting export orders. According to Zoller, export orders are increasingly being overtaken by JVs and partnerships that enable client customer develop an industrial foundation.

GEM will give the capital injection via a subscription of Laep’s shares but even so, Laep would not reveal just how many shares are to be subscribed in the offing. However, Laep did say that it plans to utilize the accrued funding from GEM subscription to aid its development through funding investments and acquisitions.

Should the deal go through, this will be the second time GEM is being approached to for a capital injection by Laep after having been called upon for a similar offer back in June when it gave 126 million Brazilian reals to the company via a subscription of 109.7 million Laep shares. GEM was begun in 1991 and has since grown to a $3.4 billion alternative investment group and is involved in the management of a varying amount of investment vehicles that are targeted on emerging markets all over the globe.

In May 2006, Laep successfully purchased Parmalat Brasil after the collapse of its Italian parent company, Parmalat SpA. At the time of the acquisition, Parmalat was still under restructuring in the domestic Brazilian courts after the failure of its parent in the 2003 crisis.

Laep Ltd’s principal activity is to invest in companies engaged in the production and distribution of dairy products. It deals with production, processing, marketing and distribution of dairy products and other food products like: cakes, cookies, tea and juices. The Group also operates with private equity investment, leasing, cattle raising and agricultural and real estate sector. It owns brands like: Parmalat, Gloria, Alimba, Lacesa, Kidlat, Lady, Ibituruna, Pocos de Caldas and Paulista.

Laep Investments Ltd., a private equity fund that controls Parmalat, rose 14 percent on Wednesday, and Parmalat spiked as much as 26 percent. In January, JBS, Brazil’s giant food company had been speculated for a potential Pramalat Brasil acquisition, the company Laep Ltd controls. Laep reiterated that it would be going on an investment spree, mainly expected to target acquisitions in the country and investment opportunities that would help expand the company.

Capital Dynamics is a Swiss company that offers advise to private equity investors and has thus far, advised funds summing up to over $21 billion under its management. The company reported Thursday it will commence its Sao Paolo operations with an office to be headed by its Vice President, Filipe Cerqueira Caldas. Currently, the Swiss company has seven other offices and expects that its new operations will enable it get co-investment and clean energy investment opportunities, in addition to building links with other domestic fund managers.

The Latin American market has attracted interest from many funds such as the May investment by UK based Apax Partners with the acquisition of a 54.2% stake in Tivit Terceirizacao de Tecnologia e Servicos. The $485 million investment in the Brazilian Stock Exchange Listed information technology and outsourcing Services Company marked Apax entry into the Latin American market.

In the meantime, co-founder and managing director, The Carlyle Group, David Rubenstein said emerging markets like Brazil’s are currently very attractive areas for private equity investments, with Advent International concluding its fifth fund worth $1.65 billion in Latin America in April, marking the Continent’s biggest fund to date.  At the same time, reports surfaced that an American buyout company, Warburg Pincus plans to re-introduce its presence in the country with an office opening in Sao Paolo. The company closed its Brazilian operations office in unknown circumstances.

Capital Dynamics Head of the new Brazilian Sao Paolo office, Caldas said the office is proof of the company’s growth expectations, reiterating the company’s confident nature on Latin America’s vast opportunities, coupled with its commitment to the continent. He said that the office, together with its domestic investment professionals in the country will enable the company recognize and expand domestic business networks.

In April, the Latin America Venture Capital Association (LAVCA) reported in a survey that private equity and venture capital investment in the continent fell less in 2009 when compared to other global markets. According to LAVCA, Latin American investments peaked at $3.3 billion in 2009, a 29% fall from 2008, whereas fundraising fell 43% to $3.6 billion.

The announcement for the July 14th tender was made by Brazilian president Luiz Inacio Lula da Silva at a ceremony yesterday. Even so, the tender will be officially published in the country’s gazette on July 14th, today, together with additional information on the government agency’s official site, the spokesman added yesterday. 

As such, the tender was today published and bid envelopes are expected to be submitted by the 29th of November 2010, with the tender to be subsequently awarded on 6th of December this year as well, ANTT director, Bernardo Figueiredo said.

The tender entails the construction of a 511 km railroad, which includes 90.9 km of tunnels and 103 km of bridges and overpasses. It is expected that the bullet train will operate at speeds of about 300 km/h to 350km/hr. Thus, the concession will be given to the bid that provides the lowest passenger fare and requires the least amount of public financing.

On the other hand, the Brazilian agency has set the fare for a one way ticket between Rio de Janeiro and Sao Paolo, an economy class ticket, at about 150 reals to 200 reals. The bid has attracted infrastructure giant companies from around the globe with companies from Germany, Spain, France, China, Japan and Italy showing particular keenness for the tender.

The mega infrastructure development project is expected to have approximate gross operating revenue of 193 billion reals in the project’s 40 year concession time frame. The Brazilian state owned investment financier, BNDES, will fund about 70% of the investment’s cost.

However, the concessions for the major infrastructural development project are still being undertaken before being put out to tender, even though it is pegged at the 40 years time frame.  BNDES, the financier of more than half of the capital, is a Brazilian state owned Development Company that offers funds for projects within the country in addition to its key role in the privation programs undertaken by the Brazilian government; with an annual 2008 funding that topped 90.9 billion reals, representing a 40% growth when compared to the year 2007.

The Rio de Janeiro-Sao Paulo-Campinas bullet train project is in line with other similar major investment projects in road concessions, oil and gas amongst others that BNDES has funded.

However, Magazine Luiza rejected the claims insinuating that it as well had capital injection plans for further expansions, in a move that pundits predict would increase competition in the country. Magazine Luiza had been speculated to be bidding for a takeover of Lojas Maia that has 140 stores, with robust operations in the Paraiba state in Brazil. According to current company estimates, Lojas Maia accrued revenues of $571 million in 2009.

The Brazilian magazine, credited with the reports, had said that talks for the potential investment were currently at an advanced stage between Trajano and rival Lojas Colombo, another giant retail company with a chain of stores and major operations based in Southern Brazil. The two companies however denied the reports through statements issued to media houses, reiterating no existence of any such talks.

However, the deals as speculated would see Trajano get fresh capital injection from BTG Pactual, a Brazilian securities company, said the paper.  The speculations over Magazine Luiza’s intentions come in the wake of the company’s lackluster investment in acquisitions as its rivals have gone into consolidations and acquisitions in the country’s growing home appliance market.

As it is, its rivals are merging in a bid to conquer larger market share faster, negotiate better prices with their suppliers and initiate expansion in areas outside their existing operations in Sao Paolo and Rio de Janeiro. In 2009 December, Grupo Pao de Acuar reported it had successfully purchased Casa Bahia, its rival in asset swap, concluded in July.

Other players in the country’s home appliances retail sector, Insinuante and Ricardo Electro as well announced they had gone into a deal to merge and make use of the growing demand for TV sets, freezers and other consumer appliances. Even so, a spokesman for Magazine Luiza said the company is keen on building an additional 20 stores in its chains this year, making its overall number of stores peak at 466. If the reports over its plans are anything to go by, Colombo’s majority shareholder, Adelino Colombo, may have to give up control of the chain in lieu of a small stake in Luiza Magazine.

The Portuguese government said it would comply with the court ruling but vowed to find a mechanism that allows it comply with EU laws while safeguarding its National interests at the same time. Analysts were quick to point out that the Portuguese government might be keen on wringing concessions from Telefonica.

Jose Manuel Barroso, the European Commission President, a Portuguese national himself, lauded the court’s ruling, reiterating the opinion that golden shares ruin the single market. This ruling comes amidst ongoing European Commission’s moves to eliminate golden shares over the gone five years, viewing it as a stumbling block to cross border investment opportunities.

Elsewhere, Silva Pereira, a Portuguese cabinet Minister, said the government was keen on safeguarding its national interests, adding that the courts ruling was not “retroactive,” but the government still feels its concerns over Portugal Telecom’s move are justified. Pundits expect Telefonica might have to play along with the Portuguese government’s machinations by tabling the offer in a way that is favorable to the government.

The Minister reiterated the government’s view, that national interests would be secured if Telefonica agrees never to make an offer for all of Portugal Telecom, or better yet, that it will vote its stake in PT in favor of the company’s board, he said. The Portuguese government has maintained its view that PT’s stake in Vivo is of national interest and as such, reflects the country’s international presence in its former colony, Brazil.

Pundits expect the ruling to speed up Telefonica’s purchase bid for PT’s Vivo stake, however, negotiations are expected to resume soon between PT and Telefonica and the two might have to mollify the Portuguese government. With the pronouncement of the ruling, Vivo shares went up 1.2% in trading whereas PT shares declined by 0.6% and Telefonica went up 1.2% as well. Telefonica reiterated that the EU Court’s decision justified its bid for PT’s Vivo stake.

The Brazilian government is expected to hold a bidding round in 2011 or 2012 for oil fields exploration licenses, with a new law on the way that will allow companies such as Total to take part in the bids. Last week, Total reported it had purchased a 20% stake in BM-S-54 license, owned by Royal Dutch Shell offshore the Santos Basin, south of Rio de Janeiro.

The two companies are expected to commence operations in the basin by end of 2010. Marc Blaizot, Head of geosciences at Total, said the move was an initial step in the French Group’s expansion into Latin America, given the fact that the company has no producing assets in Brazil yet.  Currently, Total has expansive drilling operations in West Africa, Northern Europe and the Middle East.

He noted the fact that Total’s entry into Brazil was late but reiterated that the country still has vast areas of interest that are yet to be explored in the Santos and the Campos basin, thus the Total wants to venture into the country with the coming rounds of license bidding.  It emerged that Total, in the early 2000s had kept off the Brazilian market as it was not sure that it would find considerable oil reserves below the salt layers on the ocean floor.

However, other oil companies had taken the venture and include companies such as BG group, a British company, Galp from Portugal and Respol from Spain with interest in Brazil’s deepwater subsalt fields. Blaizot reiterated that Total had mistakenly assumed Brazil’s potential reserves levels as doubtable, but it had been shown that they are evidently much better than expected.  The Brazilian venture is expected to hold vital growth opportunities for the company, with the country in need of mega investments to tap its offshore fields that require enormous     technological expertise for continued production beyond 2020.

The Brazilian legislature passed a plan that creates production sharing mechanism meant to replace the current concession model in future oil projects and bolster the government’s control over huge deepwater reserves off its coastline. Blaizot said Petrobras, the Brazilian state owned oil giant, was very weary of the considerations but is as well keen on international partnerships.

The contractual investment deal will be undertaken over a six year time frame and will involve Vale transporting about 990,000 metric tonnes per annum of Usiminas’ steel, to commence next year from Usiminas’ Ipatinga operations in the Brazilian state of Minas Gerais to the Sao Paolo state, a statement from the company read. The new transport deal will take up the tonnage by 32% over what is currently transported under the current deal with Vale SA and additionally enables Usiminas to institute per annum cost savings of about $1.07 million.

The cost savings, according to the company, will accrue from the fact that, with the use of the efficient rail system, road transport will be minimized, thus the company will produce nearly 150 wagons for use with the signing of the new deal. Additionally, the five year iron ore transport agreement deal will enable Usiminas to bolster the amount it transports from its mines in the state of Minas Gerais to Ipatinga to about 155,000 tonnes from the existing 120,000 tonnes per month, the statement further indicated.

Vale SA is a Brazilian metals mining giant with interests in iron ore and iron ore pellets amongst other metals. Vale as well operates a logistics business in Brazil with various investments in JV and affiliate businesses in the energy and steel industries. The company’s global operations have seen it set up base in Canada, Indonesia and New Caledonia.

However, its chief nickel mining business is undertaken by its subsidiary, Vale Inco Ltd that carries out the global operations in the three countries. Vale has been on the acquisition trail, taking over Rio Tinto’s Corumba iron ore mine in Brazil and its logistics business as well. On the other hand, Usiminas is a steelmaker listed on the Sao Paolo stock Exchange, with 13 companies and mining, steel and iron operations amongst other businesses such as logistics. Usiminas currently employs 29, 784 employees in its facilities across the country.

The deal is expected to bolster the operation of its steelworks in Ipatinga. The company has a rated capacity of 9.4 metric tonnes per annum, accounting for almost 25% of the Brazilian steel market.

Based in New York, the International Law firm has had a long stint in Latin America and its portfolio includes a full range of legal services inclusive of mergers and acquisitions, project finance, private equity, corporate finance, venture capital and emerging companies, commercial and products liability litigation amongst a host of other services. According to the announcement, the new Sao Paolo office operations will commence as soon the investment gets approval from the Brazilian Bar. The details of the amount paid for the property were not however disclosed.

The investment is expected to get stamping over the coming few weeks, with the two new experts expected to bring in extensive expertise on structural finance, cross border finance, trade and securitization transaction operations in the country. Chadbourne partners said the success and development of the firm’s Latin American business, together with Brazil’s burgeoning importance in the global economy, had motivated their move, terming it “decisive,” and adding that it is aimed at enabling the firm gain further capabilities in the country.

They further reiterated their expectation that the country’s focus and strong international finance experience will help strengthen the firm’s capabilities given the fact that it has been active in the Brazilian market for 15 years. However, the firm vowed to push on with steps to reinvigorate its place as a predominant legal firm in the Brazilian market.

The new Sao Paolo office makes the American firm the second New York based firm to have operations in Brazil and Mexico, Latin America’s two biggest economies. The firm’s expertise in international finance and project finance together with its long presence in the region is expected to offer it a platform to serve its customers and expand considerably. The firm’s new office in Brazil will be multi-disciplinary, but will bias on cross border mergers and acquisitions, international bank finance, project finance, capital markets, private equity and international arbitration.

The company has twelve partners in Brazil and is one of the few American law firms ranked by Chambers Latin America for its services across multiple disciplines. The firm has other global operations in Mexico City, London, Moscow, Poland, Dubai and Beijing

Pieter Jacobus Vader, BHG’s president, said the new investment acquisition comes as part of the group’s strategic plan that seeks investments in large urban areas, with a bias on business travel. With Cuiaba currently one of Brazil’s top agribusiness centers, on top of its proximity to some of Brazil’s major tourist destinations for example the Pantanal and Chapada dos Guimaraes, and its host status for the 2014 world cup to be held in the country, BHG hopes to increase its presence in the region considerably.
The acquired property is made up of 6,630m², 104 rooms, two conference rooms, two meeting rooms, a business center restaurant amongst other amenities, and the investment deal includes a 640m² parking lot the hotel might likely use for expansion. The property will fly the Golden Tulip flag, which has a 4-star standard. With the acquisition of this new hotel, BHG further strengthens its position as the country’s third-largest hotel company.

The Brazil Hospitality Group is amongst the country’s biggest group hotels and manages 32 hotels, out of which 16 are the groups and the rest are managed for other investors. BHG begun from the merger of Invest Tur Brasil and Latin America Hotels (LAHotels) last year in February and had consolidated by end of year. BHG has another exclusive deal with Golden Tulip Hospitality Group in South America through its brand names, Royal Tulip and Tulip Inn.  In just 18 months of operations, LAHotels has become the third largest hotel company in Brazil.
BHG has for long been keen on investment opportunities in management, acquisition or the construction of hotels, particularly in Brazil’s major capital cities. The group’s acquisitions in 2009, December fomented its position as an equal amongst Brazil’s largest hotel chains.

The group made two investment acquisitions in December last year, taking up Hoteis Albert International, in Porto Alegre (Rio Grande do Sul) and the purchase of shares in the four-star Condominio do Edificio Beira Mar, in Salvador (Bahia). LAHotels aims at acquiring and managing hotels or companies that own hotel assets in Brazil and in other countries in Latin America. BHG (BHGR3) shares are traded on the Sao Paulo Stock Exchange (Bovespa).