Brazil’s BTG Pactual sells $1.8 billion stake

By Elzio Barreto

SAO PAULO (BestGrowthStock) – BTG Pactual (BTG.UL: ), the Brazilian investment bank controlled by billionaire Andre Esteves, raised $1.8 billion in a cross-border deal that underscores Brazil’s status as one of the world’s hottest investment destinations.

BTG Pactual, the biggest independent securities firm in emerging markets, sold an 18.6 percent stake to a diverse group of heavyweight investors from Asia, the Middle East, Europe, North America and Latin America. The buyers included sovereign wealth funds from China and Abu Dhabi as well as some of Europe’s richest families.

The deal is the latest sign of intense investor interest in Brazil, where a boom in consumer credit and spending is lifting millions of people into the middle class. Sovereign wealth funds, eager to find high-yield investments at a time of global economic turmoil, have been particularly keen to expand their presence in Latin America’s largest economy.

“Certainly this investment is a statement of confidence in the Brazilian economy,” Esteves said on a conference call.

The deal is another feather in the cap of Esteves, a 42-year-old financial wunderkind who personifies the rise of Brazil’s banking sector to global prominence.

The capital injection will bolster BTG Pactual’s shareholders’ equity to $4.3 billion, helping the firm gain muscle to grow in coming years and offer lending to clients as part of takeover deals.

The group of investors included affiliates of the Government of Singapore Investment Corp (GIC.UL: ), China Investment Corp (Read more about U.S. companies investment into China) (CIC.UL: ) and the Abu Dhabi Investment Council.

U.S. buyout firm JC Flowers & Co, Exor (EXOR.MI: ), an investment holding company controlled by Italy’s Agnelli family, and Inversiones Bahia, an investment vehicle for the Motta family of Panama, were also part of the group.

The bulk of the investment was put up by the sovereign wealth funds, Canadian pension fund Ontario Teachers’ Pension Plan Board and JC Flowers, with the families accounting for smaller stakes, according with a source with direct knowledge of the deal.

Some BTG Pactual partners also put up funds as part of the capital increase.


The investment by the sovereign funds opens the way for them to invest in Brazil as the country prepares to host the 2014 World Cup and the 2016 Olympics with billions of dollars in infrastructure projects.

Brazil’s economy is set to grow more than 7 percent in 2010, making the country a magnet for investors.

“Most of them, if not all, have a rich agenda for investments in Brazil and Latin America,” Esteves said.

“Some of them are more concentrated in infrastructure, others have broader policies. Certainly Brazil is a special target of investments for all of them.”

BTG Pactual had considered an initial public offering to raise the funds, but postponed the plans because of volatility in global markets.

Esteves said an IPO was still possible in the medium term. BTG Pactual has no immediate plans to use the funds for acquisitions, but takeovers might be possible in the future, particularly in Latin America, he added.

Esteves, a mathematician who started as a computer technician at Pactual before rising in the ranks to become CEO, sold the firm to Swiss bank UBS AG (UBSN.VX: ) in May 2006 for about $2.5 billion. He and some partners bought back Pactual last year for about $2.5 billion.

(Reporting by Elzio Barreto, editing by Dave Zimmerman and Ted Kerr)

Brazil’s BTG Pactual sells $1.8 billion stake