Put Marcos Francisco Vilas Boas Buzo and Andre Jerusalem –  21/5/2020 

The National Bank for National Economic and Social Development (“BNDES”) published the Public Call for Proposals for the Selection of Credit Funds for Micro, Small and Medium-sized Enterprises that will receive contributions intended for the expansion of credit concession for micro, small and medium-sized companies as well as for individual entrepreneurs. BNDES will select up to 10 (ten) investment funds, which will receive contributions through BNDESPAR, totaling up to R$4 billion, provided that their investment policy is to serve small and medium-sized companies. The contribution will be limited to R$500 million per fund, with BNDESPAR's participation limited to 80% (eighty percent) for subscription of single-class shares, or 90% (ninety percent) for senior-class shares. The proposal of the interested funds to be sent to BNDES must include, at a minimum, the following information:

• (i) Fund modality;
• (ii) Class of shares and amount requested from BNDESPAR;
• Name and history of the agents involved in the structuring, administration and management of the fund;
• Information about the experience of the fund team;
• (v) Costs involved in structuring, administration and performance fees;
• Portfolio strategy;
• Strategy for attracting other investors;
• Credit monitoring and recovery strategy; and
• governance model.

In addition, the funds also must meet the following criteria:

• (i) Have committed assets of at least R$100 million (one hundred million reais);
• (ii) The initial term determined must be at least 2 (two) years and at most 6 (six) years;
• The team and operational base must be based in Brazil;
• The values must be applied exclusively in Brazil;
• (v) Origination fees shall be applied for the benefit of the fund; and
• The fund's investment policy should delimit the gross operating revenue of the target companies in the year immediately preceding the fund's support.

Furthermore, funds of the type “Originator” (those who invest, mandatorily, in credit rights originated from the client base of a large company, from an electronic platform) must comply with the following requirements:

• (i) Inform the legal qualification of the originator and administrator;
• (ii) The originator's economic group must prove annual gross revenue above R$300 (three hundred) million in the fiscal year prior to the submission of the proposal;
• The originating economic group must subscribe 20% (twenty percent) or more of the fund's committed capital, in the case of single class shares, or 10% (ten percent) or more, if subscribing to subordinate class shares, in both cases, the minimum investment must be R$ 20 million;
• Prove the accreditation of the person responsible for the fund with the CVM and the authorization granted by the CVM to carry out the activity; and
• (v) The fund's investment policy should limit the exposure to R$$ 200 (two hundred) thousand per borrower, 75% (seventy-five percent) of the contributions should have a term equal to or greater than 270 (two hundred and seventy) days, including 60 (sixty) days or more of grace period and, finally, the borrower's effective cost should be less than 3.5% (three point five percent) per month.

Furthermore, regarding the funds “SME” (those that do not fit the definition above, have a manager registered with the CVM and carry out credit operations through their own electronic platform or through partner companies), must prove the following requirements:

• (i) Prove the accreditation of the person responsible for the fund with the CVM and the authorization granted by the CVM to carry out the management/administration activity;
• (ii) Have a minimum net worth of R$500 million in the FIDC class, or R$1 billion in the sum of asset classes, according to the AMBIMA Investment Fund ranking;
• Commitment by the manager and/or partners to subscribe 2% (two percent) of the fund's subscribed capital, in addition to proving minimum collection of 10% (ten percent) of the fund's committed capital in single or subordinated class shares, the process may be in progress at the time of submission of the proposal, requiring the presentation, by each of the investors, of at least (the) formal statement by the investor, detailing the exact amount of the investment; (b) subscription bulletins for shares; (w) investment commitment; or (d) declaration by the administrator informing the subscribed capital of the Fund; and
• The fund's investment policy must provide for a maximum exposure of R$2 million per borrower, 75% (seventy-five percent) of the contributions must have a term equal to or greater than 360 (three hundred and sixty) days, including 60 (sixty) days or more of grace period and, finally, the borrower's effective cost must be less than 4% (four percent) per month.

Proposals must be submitted by May 3, 2020, in electronic version to chamadampme@bndes.gov.br, which must be completed in accordance with the annex to the notice. In case of any doubts, the same email address may be used to submit questions to BNDES. Our office is available to assist you in structuring the proposal to be sent to BNDES, as well as in all other matters involving capital markets and investment funds.