How to Encourage Greater Private Equity Investment in Latin America

1. 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

2. As of December 31, 2001. (1) An Introduction • Deutsche 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

3. Latin Power Funds • Scudder 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

4. What is Private Equity? • 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

5. Who Invests in Private Equity Funds?

6. 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

7. 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