The Brazilian Development Bank (BNDES) is a state-owned bank that is a key instrument in Brazilian economic development. The BNDES mandate is to foster sustainable, competitive development in the Brazilian economy and support job creation while contributing to a reduction in social and regional inequality.
The BNDES is the main financing agent for development in Brazil. Since its foundation in 1952, the BNDES has played a fundamental role in stimulating the expansion of industry and infrastructure in the country. Over the course of the Bank’s history, its operations have evolved in accordance with socio-economic challenges. They now include support for exports, technological innovation, sustainable socio-environmental development and the modernization of public administration.
The Bank offers several financial support mechanisms to private companies of all sizes with headquarters and administration in Brazil, as well as individual entrepreneurs, enabling investments in all economic sectors. In analyzing whether to provide financial support to a company or project, the BNDES emphasizes three factors it considers strategic: innovation, local development and socio-environmental development.
The BNDES can provide financial support to companies established in Brazil through three mechanisms:
▸▸ Financing – earmarked for investment projects, one-off purchases of new machinery and equipment, exports of machinery, Brazilian equipment and services and the acquisition of goods and production inputs. Financing modalities are divided into products, according to the purpose of the undertaking. These products define the general rules of applicable financial conditions and the operating procedures for financing. Some products are considered financing lines, aimed at certain clients, sectors and undertakings and, therefore, have more specific rules. Among the bank´s products is BNDES Project Finance, earmarked for the financial structuring of investment projects and contractually supported by project cash flow. Assets and receivables (asset-backed) may serve as guarantees for the same undertaking. Additionally, the BNDES offers financing programs of a transitional nature, which are focused on a particular economic segment. The Bank also administers some funds, which are resources to support specific activity sectors.
▸▸ Non-repayable Funds - investments of a social, cultural (educational and research), environmental, scientific or technological nature, which need not be repaid to the BNDES.
▸▸ Subscription of Securities – the BNDES may participate as a subscriber of securities - i.e., shares, simple debentures, convertible debentures, subscription bonds, options and other derivative products, in addition to articipation in asset-backed (receivables) investment funds (FIDC) – in publicly-listed companies, in public or private issuances, or in companies that may join the capital market in the short or medium term, through a private issuance. In some specific cases, financial support may be provided in a mixed manner by means of financing for a part of a project and through the subscription of securities for another part of it.
In addition to the BNDES, several international, national and regional commercial banks operate in the Brazil, providing financing lines to companies and investors. Most of these banks are organized under the Brazilian Federation of Banks
(FEBRABAN) at www.febraban.org.br