kgn presentation (institucional)

1

Outlook – Investment Opportunities

Made by Leonardo Slhessarenko and Gabriel Prado de Barros

Executive Summary

2

Overview of Brazil’s Economy

Overview of Mato Grosso’s Economy

Expertise

Business Opportunities

Financial Transactions

Legal System

3

Overview of Brazil’s Economy

4

Overview of Brazil’s Economy

Seventh largest economy in the world

Brazil has an export-oriented economy

Extensive natural resources, agricultural diversity and manufacturing production

Issues: Bureaucracy, corruption and weak infrastructure

Opportunities: Average US Dollar to Brazilian Reais is R$3.8 to $1 (10/15/2015)

Source: World Bank and economia.uol.com.br/cotacoes/cambio/dolar-comercial-estados-unidos/?historico

5

Average US dollar to Brazilian Reais

USD/BRL 3.8 - 10/15/2015

Source: World Bank and economia.uol.com.br/cotacoes/cambio/dolar-comercial-estados-unidos/?historico

In 2015 the biggest appreciation of the dollar in the history of Brazilian Reais was recorded

6

Commodities global ranking

Source: USDA, FAO, IBGE. World production: USDA harvest 12/13

World production of Grains & Oilseed

Brazil in the world ranking

1st 2nd 3rd 4th

1st 19,6% 2nd 16,4% 3rd 10,1% 4th 6,6%

5th

• Coffee

• Orange juice

• Sugar Cane

• Soybeans

• Beef

• Poultry

• Corn

• Milk

• Grape

• Pork

• Cotton

8

Increase of agricultural area

Source: FIESP/ICONE IMEA

Increase of 23 millions acres for the next years

Brazil still has room to grow

Acres

Millions

128

151Millions

Acres

9

Projection by 2022

Source: FIESP/ICONE IMEA

Bill

ions

T

Mill

ions

T

Agriculture Production

Livestock Production 14%44%

Projections: Cotton, rice, barley, beans, wheat, soybeans, corn, sugarcane.

Brazil's favorable climate allows for two crop per year

Brazil’s arable land has more growth potential than any other country

10 10

Costs linked to production

75% of Costs Are Linked to US$

Lower % of Fixed Costs

Fixed16%

Variable84%

US$75%

Reais25%

Key Highlights

Fertilizers are acquired through bank financing; equivalent amount of soybean is immediately pre-sold to lock-in operating margins

Leasing contracts are governed by a number of soybeans bags per hectare, aligning costs to production revenue

Supply contracts for chemicals are guaranteed by cotton sales, creating a natural hedge for one of the largest production costs

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Overview of Mato Grosso’s Economy

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Brazil’s commodities leader

Source: CONAB, IBGE e Imea

Mato Grosso accounts for 9% of the world’s total soybean production

Mato Grosso accounts for 3.9% of the world’s cotton production (9 th largest worldwide)

The State of Mato Grosso produced over 52 million tons of total commodities in 2014/15

The State of Mato Grosso is the largest overall exporter in Brazil’s Midwest and one of the largest in Brazil

1st

13

Mato GrossoAgribusiness GDP compared to other studies developed for other States

14Source: Imea

Mato GrossoShare in Revenue

15

Mato GrossoDevelopment of agricultural production

Area (millions Ha) Production (millions Tons)

Source: Imea

16

Mato GrossoTotal agro production for the next years (tons)

Source: Imea 2012

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Conservation Unities – 6%Preservation areas by producers - 41%Agricultural – 9%Pasture – 27%Others uses – 2%Cities of Mato Grosso

Natives Lands – 15%

Other States

Land Uses & Occupation

Mato GrossoLand uses & occupation

Source: Imea 2014

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Expertise

The Dealmaker

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1. Find an Opportunity “Client”

2. Analyze and Evaluate Offering Guarantees

for both sides 1. Find Capital

2. Capital and ROI Strategies

3. Retain Client or Exit

Strategy

3. Create strategy to Raising Capital

OPPORTUNITY

INVESTMENT