Acquisition Finance 2025

BRAZIL Law and Practice Contributed by: Caio Ferreira Silva, Thiago Braga Junqueira, Vinícius Pimenta Seixas and Rodrigo Vieira, Pinheiro Neto Advogados

1. Market 1.1 Major Lender-Side Players National and International Banks

The Brazilian National Development Bank ( Ban - co Nacional de Desenvolvimento Econômico e Social , or BNDES) is a public entity created to foster economic and social development in the country, and has historically played a major role in the Brazilian market for acquisition finance by extending subsidised loans to certain buy- ers and companies meeting its requirements. BNDES reached its peak equity stake in such transactions in December 2014, totalling 23%. Recently, however, entities have started to resort more frequently to capital markets transactions co-ordinated by international banks to fund their acquisitions. Although the incumbent govern- ment administration seeks to increase BNDES′s stake in the market, it appears that the recent capital markets growth and the greater partici- pation of private lenders in acquisition finance transactions in Brazil will continue, and the country has experienced a huge growth of capi- tal markets financing via debenture issuances over recent years. Global Private Equity Funds More recently, many global private equity funds have been increasing their share in the local M&A arena. As a result, more complex and sophisti- cated structures – whereby financing and fund- ing are contracted offshore by international pri- vate equity firms (and subsequently channelled through local investment funds) or structured via investments in local vehicles backed by for- eign investors to acquire target companies – are becoming increasingly common. 1.2 Corporates and LBOs The cost of financing in Brazil remains very high compared to more developed economies. Despite the reduction in interest rates during the first nine months of 2024, rates increased to 12.25% in December 2024 and rose again to 13.25% in January 2025 before reaching

The acquisition finance market in Brazil is very dynamic, and major Brazilian and international banks play an important role in structuring and advising acquisition deals. Top advisers in the past year include local banks such as BTG Pac- tual, Bradesco BBI, Itaú BBA, XP Investimentos, Safra, BR Partners and Vinci Partners, and glob- al players such as Rothschild, Goldman Sachs, Bank of America, Santander, Lazard, UBS, Citi- bank, JP Morgan, Morgan Stanley and Jefferies. Brazil’s M&A market experienced a modest increase in 2024, partially influenced by the country’s base interest rates. After remaining stable at 13.75% for a period in 2023, the Central Bank of Brazil began reducing the rate, bring- ing it down to 10.5% in May 2024. However, a reversal occurred in the second semester, with the rate climbing back to 12.25% by year-end, showing an upward trend. The elevated rates led to increased financing costs, making investors more cautious and impacting the overall volume of M&A transactions. Nonetheless, Brazil’s M&A market saw an uptick in activity in 2024, with expectations of further improvement in 2025. Despite recent market developments, as well as changes in capital markets regulations, which have led to greater liquidity, Brazil still lacks a robust secondary market, while the acquisi- tion finance market is highly concentrated, and most M&A deals continue to be funded by local banks such as Banco BTG Pactual, Itaú Uniban- co, Banco do Brasil, Bradesco and Caixa, with Santander (the only foreign bank with a local presence among the major players) completing the list of the top lenders for acquisition finance transactions in Brazil.

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