The Brazilian FIP: Recent Clarification: What is a Private Equity Entity? What are the Tax Consequences of Not Being a FIP?
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Brazil’s Private Equity industry began to take shape amid 1980’s and 1990’s, with the formation of the first local PE houses and arrival of international houses, both attracted by promising opportunities brought by the privatization process run by the Brazilian government back in the day, as well as by the inclusion of Brazil in the context of global economy.
Conscious of that trend, the Brazilian Government took actions to conceive a proper ecosystem for boosting private equity and venture capital activity on the ground.
The first step was the creation of the first type of regulated fund addressed to investing in small companies, the Fundos Mútuos de Investimento em Empresas Emergentes (FMIEEs). The FMIEEs (a vehicle that was more suitable for venture capital investments) wascreated in 1993, by way of Instruction n. 209/94, enacted by the Brazilian Securities Exchange Commission, Comissão de Valores Mobiliários (CVM).