BTG Holds Talks to Sell Stake in Recovery, Non-Performing Loans

  • Stake and loan book represent about 0.2% of bank's assets
  • BTG is selling assets to boost liquidity after Esteves arrest

Grupo BTG Pactual SA, the Brazilian investment bank fighting to boost liquidity after the arrest of its billionaire founder, is negotiating the sale of a stake in distressed-asset-management firm Recovery do Brasil Consultoria SA and a portfolio of non-performing loans.

The holdings represent about 0.2 percent of the firm’s assets, the Sao Paulo-based company said in a regulatory filing Friday. BTG had 302.8 billion reais ($78 billion) in assets at the end of September, according to its third-quarter earnings statement. Lone Star Funds entered into exclusive talks to buy BTG’s stake in Recovery for at least 800 million reais, Reuters reported Thursday.

Recovery manages about 50 billion reais and its revenue will probably jump to 100 million reais this year from 70 million reais in 2014, Recovery Chief Executive Officer Flavio Suchek said in October.

BTG has been seeking to sell assets after its then-Chief Executive Officer and Chairman Andre Esteves was arrested on Nov. 25 amid allegations he sought to obstruct a corruption investigation involving state-oil producer Petroleo Brasileiro SA. Esteves has denied any wrongdoing through his lawyers. On Thursday, Brazil’s supreme court ordered his release from prison and said he must remain under house arrest in Sao Paulo.

The bank has lost about half of its market value since Esteves was arrested. It’s already sold a 2.38 billion-real stake in hospital-chain Rede D’Or Sao Luiz SA and portfolio of loans, including one totaling 1.2 billion reais to Banco Bradesco SA. On Thursday, BTG said it had recently sold a loan book of about 900 million reais to Itau Unibanco Holding SA. Earlier this month, the bank secured a credit line of 6 billion reais with the nation’s privately sponsored deposit-guarantee fund.

BTG dropped 1.9 percent to 15.31 reais at 11:13 a.m. in Sao Paulo, compared with a 7.6 percent gain on Thursday after Esteves won his bid to be released.

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