Notice
The fund is closed for new capital commitments. For more information, please contact on mezanino@neoinvestimentos.com.br .

Investment Objective
The Capital Mezanino FIP, the first brazilian mezzanine fund, targets long-term distinct returns, mitigating the risks associated to the investment in private companies by using fixed income and equity linked hybrid instruments.

Concept
With the brazilian continuous process of interest rate decline in the past years, several enterprises have come across a number of opportunities for growth within their markets. However, as these companies may not yet have access to the capital market in an efficient manner, up until now there were only two main alternatives for financing: BNDES (the country’s Development Bank) and Private Equity Funds.

However, in many cases, the companies’ needs do not fit BNDES’s existing programs or criteria. Moreover, the entrepreneurs, certain of the market opportunity at hand, might prefer to minimize the upside potential relinquished to the financial investor. In these cases, Capital Mezanino FIP represents an appropriate source of funding to finance the company’s growth strategy.

Typically, the fixed income component of the financing package presents conditions that only the large Brazilian publicly traded companies have access to:

• Term: 6 to 8 years
• Interest Rate: Inflation plus a fixed rate
• Grace period of the principal compatible with the project to be funded
• Reduced level of covenants and, usually, no guarantees

Conversely, if the company delivers the expected growth, the equity component of the financing package has the ability to capture a portion of the upside.

From the investor’s point of view, Capital Mezanino represents a tradeoff between (i) upside potential and (ii) liquidity and risk exposure when compared to traditional private equity funds.

Target Companies
Capital Mezanino FIP targets dynamic entrepreneurs who “live” their businesses and that are looking for, besides an attractive source of capital, a financial partner capable to add complementary expertise and competences, such as:

• Corporate and financial structuring
• Corporate governance’s inception and fine tuning
• Strategic and tax planning
• Support in the planning and execution of the IPO process
• Networking

Additionally, the targeted enterprises must be well established in their markets, have solid competitive advantages and in need of capital to finance rapid growth.

Capital Mezanino FIP focus especially on companies which:

• Do not require a direct participation of the fund in the company's day to day management;
• Whose turnover in the last 12 months has been above R$ 40 million;
• Have positive shareholder’s equity;
• Have positive operating and EBITDA margins;
• Have been in the market for more than 5 years;
• Operate in any segment of the economy with the exception of tobacco, firearms and gambling.

Instruments
Capital Mezanino FIP may invest through the use of any instrument or instruments that comprise fixed income and equity linked characteristics.