JPMorgan Chase & Co. expects to sign a final deal by the end of next month to sell its Brazil private-equity and hedge-fund company, Gavea Investimentos Ltda., back to the firm’s founding partners, two people with direct knowledge of the matter said.
Former central bank President Arminio Fraga and other Gavea partners, who already own 22.5 percent of the Rio de Janeiro-based firm, are negotiating final terms for the rest, according to the people, who asked not to be identified because the talks are private. They didn’t disclose terms of the deal.
Gavea partners want to own the entire firm again to have more flexibility in shaping the business, as they see the Volcker Rule and other regulatory demands on New York-based JPMorgan as factors that have slowed decision-making, one of the people said.
Officials at JPMorgan and Gavea declined to comment. Fraga, who Aecio Neves said would have been his finance minister had he won last year’s presidential election, also declined to comment.
Gavea, which has about 130 employees, has approximately $5.3 billion in assets under management in private equity, hedge funds and other types of funds, according to its website. JPMorgan is considering keeping the real estate and equity funds, one of the people said.
JPMorgan bought 55 percent of Gavea in 2010 without saying how much it paid. It purchased an additional 22.5 percent in 2013 in a deal that gave it the right to acquire the rest by the end of this year, Gavea said at the time.
A non-binding contract has already been signed and Gavea’s fund investors have been informed, according to the people.
A former fund manager for billionaire George Soros, Fraga was central bank president from 1999 to 2003, when he founded Gavea. He named the firm after a Rio neighborhood that is partially covered by a tropical rain forest and is home to Brazil’s only urban national park.
O Estado de S. Paulo columnist Sonia Racy reported on April 15 that Fraga was seeking to acquire the rest of Gavea, without saying where she got the information.