BRAZIL Law and Practice Contributed by: Thiago Fernandes Chebatt and Luiz Eugênio Araújo Müller Filho, Müller Chebatt Advogados
1.6 Recurring Revenue Deals and Late-Stage Lending Recurring-revenue lending is growing in Brazil, but it remains specialised and highly dependent on data quality and cash-conversion dynamics. Successful financings usually combine traditional protections with operational controls that link reported revenue to verified collections, including frequent reporting, audit rights and cash-trap triggers tied to churn, retention and liquidity metrics. Because “revenue” is not itself a readily enforceable asset, lenders tend to rely on identifiable receivables, control over collection flows and governance protections, rather than treating contracted revenues as a substitute for collateral. In practice, the strongest structures are those that allow early intervention before cohort quality deteriorates and before value leakage becomes difficult to reverse. 1.7 Deal Sizes, Fund Sizes and Fundraising Ticket sizes vary materially by channel. Bilateral and club private credit deals are typically sized to the quality of collateral and the feasibility of monitoring and cash controls, while larger allocations are often deployed through fund structures, debentures and securitisations that support institutional scale. Fun - draising remains cyclical and tightly linked to the domestic rate environment: when risk-free yields are high, managers must justify credit risk through struc - ture, collateral and credible workout capability; when rates ease, competition tends to compress spreads and can test term discipline. Institutional investors increasingly focus on governance, valuation method - ology and receivables verification processes, reflect - ing an understanding that operational execution is a core driver of realised returns in Brazil. 1.8 Impending Regulation and Reform Regulators influence private credit in Brazil through the perimeter of funds, offerings, financial interme - diation and market infrastructure. The CVM is central where the strategy uses investment funds and securi - ties offerings, shaping governance, disclosure, suit - ability and the allocation of duties among managers, administrators and other service providers. The Cen - tral Bank and CMN shape the landscape for regulated lenders, credit fintechs and FX settlement/reporting, which matters for cross-border loans and for origi - nators connected to private credit platforms. Recent
reforms and ongoing regulatory consolidation have generally increased expectations on compliance and operational controls, tending to favour professional - ised managers and structures that can demonstrate robust monitoring and conflict management. 2. Regulatory Environment 2.1 Licensing and Regulatory Approval A foreign lender can typically extend a cross-border loan to a Brazilian borrower without obtaining a Brazil - ian banking licence, provided the lender is not carrying out regulated financial intermediation in Brazil. The binding requirements are operational: FX settlement through authorised channels, compliance with Central Bank reporting for external credit operations, and cor - rect tax treatment of interest and fees. If the lender takes security over Brazilian assets, collateral must be created and perfected under Brazilian law, which often requires local formalities, Portuguese documen - tation (including sworn translations) and registry filings that drive priority. In practice, successful execution depends on treating these items as core closing deliv - erables and not as post-closing clean-up. 2.2 Regulators of Private Credit Funds The CVM is the principal regulator where private credit is implemented through funds and securities offerings, and it sets the baseline for governance, disclosure and investor protection. The Central Bank and CMN regulate financial institutions and parts of the credit origination ecosystem, including authorised credit fin - tech models, and they also shape FX settlement and reporting mechanics relevant to cross-border credit. Depending on the sector and collateral, other authori - ties may become relevant, such as the tax authorities for withholding and IOF compliance, the data protec - tion authority for LGPD issues where obligor data is processed at scale, and CADE in edge cases where a credit position converts into control rights or acquisi - tions that trigger competition review. 2.3 Restrictions on Foreign Investments Foreign participation in Brazilian private credit funds is generally feasible, but it is strongly channel- and investor-base dependent. Many strategies are distrib - uted under rules that segment investors by sophistica -
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