Brazil’s Treasury and Securities and Exchange Commission (CVM) is set to launch a new investment fund for ESG projects by using up to $2 billion from its climate fund to spur bank lending. This new initiative will function similar to private equity (FIPs)* and receivables investment funds (FIDCs)** to provide financing for projects aligned with ecological transformation. 

Brazil’s new investment vehicle will potentially create new deal flow opportunities for international-focused private equity and credit firms, asset managers, and impact investors, as it aims to generate more than $20 billion in private financing to strengthen the environment and climate agenda in the country.   

Let's explore the new investment vehicle proposed by Brazil in more detail. 

Key aspects of Brazil’s new investment vehicle 

• The investment initiative will use $1-2 billion from Brazil's climate fund to spur bank lending aimed at attracting more than $10-20 billion in private investment. 
  
  

• The program seeks to attract private investment in sectors such as biofuels, sanitation, water, railways, and land restoration —  and it will exclude wind and solar energy projects.
  
  

• The new investment proposal is part of a broader initiative called “Eco Invest Brasil”, launched by the Government of Brazil. 
  
  

• The investment initiative will choose selected banks to lend at least six times the amount of funds they receive from the climate fund.

Next Steps

At least four banks will be chosen for the program, and each lending bank in this initiative will be able to access a maximum of 25% of the public funds available. The selection process of participating banks is underway and expected to be completed within three months from its launch. 

Additional Background

*FIPs (Fundos de Investimento em Participações) are private equity funds that invest in private companies by acquiring equity or equity-linked securities. These funds must allocate their portfolio based on CVM regulations.

**FIDCs (Fundos de Investimento em Direitos Creditórios) works similar to private credit firms but they primarily invest in credit rights, which are receivables or other financial assets. Specifically, FIDC’s must allocate 67% of their portfolio to credit rights.  

While you’re here…

Public investment schemes like Brazil's new ESG-focused investment initiative can potentially create new investment opportunities for private market investors. 

However, leveraging these opportunities to its full potential requires extensive deal sourcing, exhaustive due diligence, and ESG performance assessments. These are areas where Auquan can help. 

Auquan automates and streamlines deal sourcing, due diligence, monitoring, sustainability, and compliance workflows so teams can move faster and more efficiently. Using advanced AI, Auquan generates material and sustainability insights on any entity worldwide — public or private — fine-tuned for your team’s investment and lending requirements.

Let’s explore how Auquan can help you and your team eliminate tedious and time-consuming manual data work and focus more on what you do best: making strategic decisions ahead of the market.