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2015 was a positive year for DGF

04/01/2016 - In spite of the deteriorating Brazilian macro scenario, 2015 was an active year for DGF’s funds and its underlying portfolio with strong overall Revenue and EBITDA growth, new investments, follow on’s and exits.

Unfortunately, Brazil is undergoing a deep recession with no signs of reversion in the short term. The economy will continue to retract during 2016 and, maybe, early 2017. The political turmoil generated by the car wash “Lava-a-Jato” investigations and the impeachment process could aggravate the scenario. In the next few months, there will be important evolutions in both of these processes. The predominant view is that the risk of impeachment is, for the time being, lower but that could turn with new revelations from the car wash investigations. The most likely scenario is that the government will try do muddle through with some minor adjustments to keep things balanced. Real changes only for 2019.

On the portfolio side, Revenues and EBITDA both showed strong individual and aggregated growth. We attribute this detachment from the overall scenario to the investment strategy we have been applying since our foundation and that has proven successful across cycles. It is based in some fundamental beliefs: (i) We are investing in some of the best entrepreneurs in Brazil and Latam. (ii) We invest in companies that sell cost reduction or process improvement solutions with low penetration in its respective niche markets. (iii) Our companies have low headcount and very high gross margins that translate to scalable business models with high profitability. (iv) Our portfolio companies have revenues in foreign exchange or have the potential to expand abroad.

We are also very happy to have completed four new investments across the different funds in 2015: Mosyle (, Mercado Eletronico (, Geofusion ( and a fourth one to be announced soon. All of these investments follow the rationale described in the paragraph above which we believe will lead to great results: great entrepreneurs, penetration, capital efficiency, scalability, large global markets and leadership. In addition, some of our best performing portfolio companies completed follow on rounds that will permit them to keep expanding. That was the case for Resultados Digitais and Ingresse, which both received follow on investments from other leading investors. In 2016 we expect to maintain or even increase our investment activity taking advantage of the uncertain short term scenario to make sound long term investments in great companies.

Lastly, DGF completed the sale of APS Energia, an ESCO, to EDP, the large Portuguese energy conglomerate, with a positive result. We believe that 2016 could be a strong year for exits since there are a few preliminary discussions already under way.

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