Pacific Investment Management Co., manager of the world’s biggest mutual fund, is setting up a team of about 15 in Rio de Janeiro as Brazil’s record-low interest rates boost demand for global investment products.
Pimco’s first Latin American office will have credit research, business development and client servicing teams through new hires and relocations, said Alec Kersman, a senior vice president and head of Latin America and Caribbean operations. The Newport Beach, California-based company, which has 13 offices worldwide, expects to set up the 15-person team within its first year of operation, he said.
“We are planning to relocate some of the members of our team from New York to Rio as well as hire additional people locally,” Kersman said by e-mail. “We have already made a handful of strategic hires and are currently looking to add resources to our local credit research team.”
Pimco, which oversaw $1.82 trillion of assets as of June 30, is a unit of insurer Allianz SE. (ALV) The firm, known for its bond funds run by Bill Gross, began expanding into other asset classes including stocks more than two years ago and announced plans to open an office in Rio in an April 17 statement.
Since August 2011, Brazilian policy makers have cut the benchmark Selic rate 500 basis points to a 7.5 percent, extended tax cuts for consumers and pressured banks to lower lending costs to revive the economy, which analysts forecast will expand this year at the slowest pace among major emerging markets.
Lower credit costs are boosting interest by investors for global products, Kersman said. The local operations will help Pimco serve those customers, including corporations, insurance companies and wealthy individuals, he said.
‘Center of Gravity’
“In Brazil, as interest rates have come down over the last few years, we have seen increasing interest across our entire client spectrum about global investment opportunities,” he said. “This trend will accelerate over the next three to five years and as the regulatory environment continues to evolve, we hope to be able to support that process.”
Pimco expects to finish in late November construction of its permanent Rio office in Praia do Flamengo, in the southern side of the city, Kersman said. He declined to give details on Pimco’s Brazilian assets under management, saying only that they are in the billions of dollars.
Rio, the former seaside capital of Brazil with a population of about 12 million, accounts for about five percent of Brazil’s gross domestic product and income per capita is higher than the national average, Standard & Poor’s said in a statement May 18. The city will host the 2016 Summer Olympics two years after Brazil hosts the soccer World Cup.
Previ, Brazil’s biggest pension fund with 159.5 billion reais ($78.2 billion) reais of assets under management as of July 31, is based in Rio, as is the country’s two biggest commodities companies, Petroleo Brasileiro SA (PETR4) and Vale SA. (VALE5) Eike Batista, Brazil’s richest person, also established the headquarters of his holding company EBX Group Co. in the city.
“Our Rio office will be the center of gravity of our Latin American business,” Kersman said. “We are looking to start the office with a relative small scale and grow as needed.”
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