Target Information

The Carlyle Group, a renowned global private equity firm, announced its acquisition of CVC Brasil Operadora e Agência de Viagens S.A. (CVC) from its Founder and Chairman, Guilherme Paulus. Following the transaction, which was completed in late December 2009, Mr. Paulus will continue to serve as Chairman and maintain a significant minority equity stake in the company. CVC, headquartered in Santo André (SP), Brazil, stands as the largest tour operator in Latin America, a testament to its extensive experience and influence in the travel sector.

Established in 1972 by Mr. Paulus, CVC specializes in bundling charter and commercial flights, cruise packages, hotels, and other travel services into comprehensive vacation offerings. With over two million passengers served annually, and a robust retail network featuring more than 400 franchised stores as well as approximately 8,000 independent travel agents, CVC employs over 900 individuals and supports more than 4,500 indirect jobs within the industry.

Industry Overview

Brazil’s tourism industry has experienced substantial growth over recent years, largely driven by favorable demographic shifts. Over the past five years, the addressable market for tour packages in Brazil has expanded by approximately 25 million people. This trend positions CVC advantageously within a burgeoning market that increasingly desires affordable travel solutions. Valter Patriani, CEO of CVC, emphasizes the shift in mindset among Brazilian consumers who are increasingly viewing air travel as an accessible option for vacations.

The medium-term outlook for CVC remains positive as it focuses on the Brazilian market, which is currently the 10th largest economy globally, with a GDP growth projection of around five percent for 2010. This growth will likely catalyze further interest in travel, especially with significant infrastructure investments leading up to Brazil hosting major events like the 2014 FIFA World Cup and the 2016 Summer Olympics.

In the longer term, CVC may consider expanding its operations into other South American markets, leveraging its established brand and operational expertise. Such expansion would allow the company to tap into new consumer bases and diversify its offerings beyond Brazil.

Rationale Behind the Deal

The acquisition of CVC by The Carlyle Group aligns with a strategic focus on capitalizing on the growing demand for travel services in Brazil. Mr. Paulus expressed confidence that Carlyle's financial acumen and extensive resources will enhance CVC’s ability to deliver competitively-priced tour packages to a rapidly growing customer segment. The partnership is expected to strengthen CVC’s market position, providing the necessary support for continued growth and expansion.

Investor Information

The Carlyle Group is recognized as one of the leading global private equity firms, known for its diverse investment portfolio across various sectors. The South America Buyouts team is particularly focused on identifying and nurturing high-potential companies within the region. With the backing of Carlyle Partners V, its flagship $13.7 billion buyout fund, and the collaboration of various co-investors, Carlyle seeks to leverage its expertise to maximize the value of CVC and progress its strategic initiatives.

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This deal presents a compelling investment opportunity, as CVC is well-positioned in an expanding market characterized by increasing travel demands. The collaboration with a reputable investment firm like The Carlyle Group provides CVC with the financial support and strategic guidance necessary to navigate the competitive tourism sector successfully.

Moreover, CVC's established brand loyalty and its innovative approach to travel packaging create a solid foundation for sustained growth. As Brazil's tourism landscape evolves and consumer preferences shift towards affordable travel options, CVC's offerings are likely to resonate well with the burgeoning market.

In summary, Carlyle's investment in CVC aligns with broader positive trends within Brazil's economy and tourism sector. Given the anticipated growth catalysts, such as upcoming major international events and increased travel infrastructure, this deal could prove to be a fruitful investment for Carlyle, securing long-term value and success for CVC.

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