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BTG Profit Beats Analysts’ Estimates Private-Equity Gains

Grupo BTG Pactual, Brazil’s top generator of investment-banking fees, said third-quarter profit more than tripled, beating analysts’ estimates on gains in the private-equity division.

Adjusted net income, which excludes one-time items, climbed to 793 million reais ($390 million), or 90 centavos a share, from 231 million reais, or 29 centavos, a year earlier, the Sao Paulo-based lender said yesterday in a regulatory filing. The average estimate of three analysts surveyed by Bloomberg was 85 centavos.

BTG, led by Chief Executive Officer Andre Esteves, 44, said revenue from principal investments, which includes the private-equity division, was 566 million reais in the third quarter, compared with negative 91 million reais a year earlier. The division benefited from the sale of its stake in STR Projetos e Participacoes em Recursos Naturais, an oil and gas holding company, for 699.7 million reais in July.

“Another sound beat provides further evidence of the benefits of BTG’s well-diversified (and unique) business model,” Mario Pierry, an analyst at Deutsche Bank AG in Sao Paulo, wrote in a report today. “The company has exceeded expectations in all three quarters.”

BTG fell 0.7 percent to 31.29 reais in Sao Paulo trading, up from its initial public offering price of 31.25 reais in April. 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.

Tam Acquisition

Investment-banking revenue increased 59 percent to 148 million reais in the third quarter from a year earlier, the filing shows. The figure includes fees earned for advising in the acquisition of Brazil’s biggest airline, Tam SA, by Chilean Latam Airlines Group SA, which was completed in July, Joao Marcello Dantas Leite, BTG’s investor relations director, said on a conference call with analysts today.

“We are optimistic with investment-banking revenues,” Chief Financial Officer Marcelo Kalim said today on the call. BTG took the top ranking in investment-banking fees this year through Oct. 26 from Itau BBA, the wholesale-banking arm of Itau Unibanco Holding SA, according to Dealogic.

BTG expects the equity and debt markets to improve in the fourth quarter and through 2013, Kalim said. Mergers and acquisitions may slow in the fourth quarter, he said.

Return on equity, a measure of profitability, was 24.9 percent in the quarter, up from 12 percent a year earlier, the company said. Sales and trading revenue declined 7.7 percent to 407 million reais. Operating expenses more than doubled to 617 million reais as bonus payments almost quadrupled to 335 million reais.

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