BTG Pactual’s Net Beats Estimate on Asset Management Revenue

Grupo BTG Pactual, Brazil’s top generator of investment-banking fees in 2012, said fourth-quarter profit beat analysts’ estimates on gains in asset management, real estate and proprietary trading.

Adjusted net income, which excludes one-time items, dropped to 854 million reais ($437 million), or 94 centavos a share, from 1.05 billion reais, or 1.32 reais, a year earlier, the Sao Paulo-based lender said yesterday in a filing. The average estimate of four analysts surveyed by Bloomberg was 74 centavos.

BTG, led by Chief Executive Officer Andre Esteves, 44, increased revenue from asset management more than fourfold to 637 million reais in the period from a year earlier, according to the filing. Principal investments, including the private-equity division and real estate and proprietary trading, surged to 512 million reais from 108 million reais. Annualized return on shareholders’ equity, a measure of profitability, climbed to 25.1 percent in the fourth quarter from 24.2 percent a year earlier.

“We expect to continue delivering significant return, above 20 percent,” Esteves said today on a conference call with analysts. “From time to time, we may post returns even more significant than we had now.”

Asset Management

BTG rose 0.5 percent to close at 36.25 reais in Sao Paulo, up 16 percent 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 stand-alone investment bank in Brazil listed itself on a stock exchange.

“By far the main highlight was the asset management line’s performance,” analysts at Banco Bradesco SA including Carlos Firetti wrote in a note to clients today.

Revenue from investment banking reached 121 million reais in the fourth quarter, up from 46 million reais a year earlier, according to the filing. BTG was the top adviser on share offerings last year in Brazil, with 22 issues totaling $1.32 billion, according to data compiled by Bloomberg. The bank was No. 7 advising on Brazilian mergers, arranging 59 deals announced during the year totaling $16.4 billion, the data show.

BTG sees growth opportunities in Latin America, including Chile, Colombia, Peru and Mexico, Chief Financial Officer Marcelo Kalim said in a separate conference call. The bank plans to start a brokerage unit in Mexico in the first half of this year, he said.

“BTG will have a presence in Mexico to complete our activities of equity sales up there,” Kalim said, adding that Mexico operations might expand to include investment banking. BTG still needs authorization from regulators in Mexico and Brazil, he said.

The company ranked first in investment-banking fees in Brazil in 2012, according to Dealogic, the London-based information and consulting service. It earned $168 million with syndicated loans, bonds and equity underwriting and mergers-and-acquisitions advising, Dealogic said.

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