Our Fall Bulletin focuses on regulatory changes, which impact and will be of interest to practitioners in the emerging market private capital investment community. Of note are changes to ways in which private equity investment is regulated in Brazil, an overview of potential shareholder and director liability in troubled investee companies in Nigeria, a regional overview of practical considerations for engaging in private equity and venture capital transactions in the Middle East and trending considerations for end-of-life funds.
Legal & Regulatory Issues
In this article King & Spalding set out some of the common issues faced by parties, particularly PE and VC investors, purchasing Middle East-based companies in the popular healthcare, education and food and beverage sectors with a focus on companies in the Kingdom of Saudi Arabia and the United Arab Emirates (UAE).
On August 30 this year the Brazilian Securities Commission (“Comissão de Valores Mobiliários” or “CVM”) enacted Instruction CVM No. 578 (“Instruction 578”) to govern the formation, operation and management of private equity funds in Brazil. Instruction 578 revoked and replaced Instruction CVM No. 391, as amended, as well as several other regulations on the matter and is now the main regulation concerning private equity funds formed in Brazil.
Recent news out of the Nigerian National Bureau of Statistics (NBS) has confirmed that, as of the end of the second quarter of 2016, the country had gone into recession for the first time in over twenty years. In a news conference held in September 2016 however, the Governor of the Central Bank of Nigeria suggested that the country’s economy may have already hit the bottom, and hence was likely to return to positive growth by the end of 2016.
In the past, managers encountering issues realising value to investors within the terms of their funds were left with few options. The maturing of the secondary market increasingly provides managers with the opportunity to obtain capital to restructure and reorganise their funds and management arrangements by way of transactions that were unheard of a decade ago. Such restructurings, often called “GP-led restructurings,” turn to a maturing fund secondary market with significant amounts of capital to deploy in secondary transactions and a willingness to enter into complex transactions to provide greater returns to investors.
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