BTG’s Net Income Drops Amid Decline in Principal Investments

Grupo BTG Pactual (BBTG11), Brazil’s largest merger adviser this year, said second-quarter profit fell 21 percent as revenue from principal investments dropped.

Net income declined to 650 million reais ($283 million), or 72 centavos a share, from 822 million reais, or 93 centavos, a year earlier, the Sao Paulo-based company said yesterday in a statement. That missed Deutsche Bank AG’s estimate of 881 million reais.

Principal investments, which includes private equity, real estate and proprietary trading, incurred negative revenue of 313 million reais in the second quarter, compared with revenue of 687 million reais a year earlier, according to the statement. The reversal in BTG’s biggest business was fueled by a drop in the stock of BR Properties SA (BRPR3), in which BTG has a stake of about 25 percent. Shares of the Sao Paulo-based real estate developer slid 15 percent in the second quarter.

BTG, led by Chief Executive Officer Andre Esteves, 45, helped underwrite the world’s biggest initial public offering this year. The investment-banking business generated 175 million reais in the second quarter, up from 129 million reais a year earlier, according to the statement.

The company, Brazil’s only publicly traded investment bank, was one of the managers of the 11.5 billion-real initial public offering of BB Seguridade Participacoes SA in April. In the same month, it advised the Kroton Educacional SA in purchasing Anhanguera Educacional Participacoes SA for 5.45 billion reais, the nation’s second-biggest acquisition this year, according to data compiled by Bloomberg.

BTG rose 2.8 percent to 27.44 reais at 5:06 p.m. in Sao Paulo. The shares dropped 14 percent this year through yesterday, compared with a 22 percent decline for Brazil’s Ibovespa benchmark index.

To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Christine Harper at charper@bloomberg.net

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