BTG Pactual, the Brazilian bank controlled by billionaire Andre Esteves, agreed to sell a $1.8 billion stake to a group of investors including the Rothschild and Agnelli families as well as Middle East and Asia funds.
The group includes U.S. investment firm J.C. Flowers & Co., the Government of Singapore Investment Corp., China Investment Corp. and the Abu Dhabi Investment Council, the Sao Paulo-based firm said in a statement today. The group will own about 19 percent of BTG following the transaction.
Esteves and his partners bought Banco BTG Pactual, Brazil’s biggest equity underwriter, back from UBS AG for $2.5 billion last year. BTG, which cited market conditions for canceling an initial public offering in June, is expanding its mergers advisory and underwriting businesses as Latin America’s largest economy grows at the fastest pace in more than two decades.
“It’s the first transaction of this magnitude in our region and a very special transaction if you consider that BTG Pactual is an emerging-market bank,” Esteves, 42, said on a conference call with reporters today.
BTG, based in Sao Paulo, managed $3.07 billion of Brazilian equity sales this year, putting it in seventh place among the country’s top underwriters. The bank advised on 42 mergers and acquisitions involving Brazilian companies that totaled $24.9 billion, according to data compiled by Bloomberg.
Brazil’s gross domestic product will expand 7.54 percent this year, according to a central bank survey of economists published today. Economic growth is benefitting from rising domestic demand and foreign direct investment, which increased 26 percent in October from a year earlier to $6.77 billion, the highest since December of 2008.
One of the goals of the transaction is to support the plans of the bank’s new partners to invest in Brazil, according to Esteves. Those investors have a “rich agenda” for Brazil and Latin America that includes infrastructure projects, which are being announced on a “daily basis,” he said.
For Exor SpA, the Agnellis’ holding company, the BTG stake will provide more opportunities in emerging markets after investments in China and India, Exor Chairman John Elkann said in an e-mailed statement.
BTG Pactual is still considering an initial public offering as a “natural development” for the bank, Esteves said on a conference call. BTG may also make acquisitions in the region, he said.
“The capital increase, from this highly respected group of investors, will allow us to consolidate our position as a leading emerging market-based investment bank and asset manager,” Esteves said in a written statement.
Linklaters LLP is representing the investor group, and Citigroup Inc. is providing financial advice. Skadden Arps Slate Meagher & Flom LLP is representing BTG Pactual.