Asset managers slam Brazil's takeover rules

29 August 2008

Small investors in Brazilian companies are left too vulnerable by the South American nation's regulatory system, fund managers have complained.

The group of money managers and pension experts are now calling on the government for stricter takeover guidelines, Reuters reports.

Recently-announced proposals from pulp producer Votorantim Celulose e Papel (VCP) to take over smaller rival Aracruz Celulose have sparked the ire of firms including F&C Asset Management, TIAA-CREF and Legg-Mason.

One of the group's key complaints is that such acquisitions make the Brazilian market less appealing for overseas investors who wish to buy minority stakes in companies.

Urban Larson at F&C Asset explained: "We are worried about the potential effect this could have in the Brazilian market as a whole since it does affect investors' perception as to how minority shareholders will be treated."

Commenting on the situation Luiz Leonardo Cantidiano, a lawyer for VCP, said: "Brazilian regulations are good because they are clear.

"If investors want more rights, they should look for a market that guarantees that."

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