The 2013 LAVCA Scorecard on the Private Equity and Venture Capital Environment in Latin America reflects ongoing efforts by regional regulators to foster a stable climate for investment. Large and small economies alike improved their capacity to monitor the development of the PE/VC industry, improve transparency and disclosure laws and create better conditions for local entrepreneurs, with six of the twelve countries showing improvements in their scores this year.
Chile led the regional ranking for the eighth consecutive year, and in 2013 improved its score due to the adoption of international financial reporting standards by non-listed firms.
Brazil continues to stand out as a pioneer and innovator in PE/VC specific regulation in Latin America.
Mexico increased its overall score for the second year in a row due to an improvement in the indicator for entrepreneurship. In addition, the new administration is focusing on competition while promising important reforms in key sectors including telecoms and energy.
Colombia also increased its score on entrepreneurship, reflecting the active role of state development banks and growing government support to improve the entrepreneurial ecosystem.
Peru posted the region’s most significant score improvements of 2013, with the implementation of a long-awaited change by the banking superintendent to reform pension fund investment laws.
The 2013 Scorecard benchmarks Latin American and Caribbean countries by comparing them with four markets outside the region – UK, Israel, Spain and Taiwan.
The 2013 Scorecard was produced in collaboration with the Economic Intelligence Unit, with support from the Multilateral Investment Fund and the Andean Development Corporation. It ranks 12 countries based on the following indicators:
- Laws on PE/VC fund formation and operation
- Tax treatment of PE/VC funds and investments
- Protection of minority shareholder rights
- Restrictions on local institutional investors investing in PE/VC
- Protection of intellectual property rights
- Bankruptcy regulation (encompassing bankruptcy procedures/creditor rights/partner liability in cases of bankruptcy)
- Capital market development and feasibility of local exits (ie, initial public offerings)
- Registration/reserve requirements on inward investments
- Corporate governance requirements
- Strength of the judicial system
- Perceived corruption
- Use of international accounting standards and quality of the local accounting industry