BTG Pactual Climbs Above IPO as Profit Beats Estimates

Grupo BTG Pactual (BBTG11), the Brazilian investment bank that went public this year, rose above its initial offering price for the first time since April after second-quarter profit beat analysts’ estimates.

BTG climbed as much as 5.7 percent to 31.67 reais in Sao Paulo, before paring the gain to 31.24 reais at 5:05 p.m. The Sao Paulo-based bank priced its IPO at 31.25 reais on April 24 and last traded above that level on April 30.

Net income increased to 822 million reais ($408 million), or 93 centavos per share, in the three months through June from 310 million reais, or 39 centavos, a year earlier, the company said in a statement on its website yesterday after the stock market closed. That surpassed the average estimate of 63 centavos in a Bloomberg survey of three analysts.

“BTG’s well-diversified business model has allowed the bank to post very strong results in adverse market conditions,” Mario Pierry, Marcelo Cintra and Tito Labarta, analysts at Deutsche Bank AG in Sao Paulo, wrote in a report today.

BTG, led by Chief Executive Officer Andre Esteves, 44, increased revenue from real estate to 308 million reais in the quarter, compared with a loss of 13 million reais a year earlier, according to the statement. The bank said it boosted global-markets revenue to 362 million reais from 35 million reais on fixed-income gains stemming from Brazil’s lower interest rates, mortgages in the U.S. and reinsurance.

‘Superior Return’

“We were able to deliver superior return on equity, despite recognizing extraordinary expenses of 221 million reais from goodwill amortization and from our IPO in the quarter,” Esteves said in the statement.

Investment-banking revenue slid 3 percent to 129 million reais in the second quarter from a year earlier. Sales and trading more than doubled to 334 million reais from 147 million reais.

“We’ll continue performing in line with our expectation in terms of sales and trading,” Esteves said on a conference call with analysts. “Market conditions will probably improve at this point.”

The firm and its shareholders raised 3.66 billion reais in the IPO, the first time a standalone investment bank in Brazil listed itself on a stock exchange. Esteves said the firm needs 6 months to 12 months to “deploy all capital” raised in the offering.

Private Equity

BTG has been expanding its private-equity division and the investment-banking business in Latin America since the offering. It bought Colombian brokerage Bolsa y Renta SA for $52 million, while its private-equity arm, BTG Pactual Participations Ltd., acquired a 40 percent stake in Brazilian retailer Leader Participacoes SA for 665.2 million reais in May.

BTG said its board approved the payment of 401.6 million reais in proceeds, including dividends, to its shareholders on Aug. 22, according to a separate regulatory filing.

“We expect to continue to deliver this type of dividends,” Marcelo Kalim, a BTG executive director, said on the conference call, adding that dividends will be paid every six months.

The firm also named Joao Marcello Dantas Leite as investor relations director, replacing Kalim, another filing showed.

To contact the reporters on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net; Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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