BR Partners Offers Debt Restructuring as Brazil StallsCristiane Lucchesi and Jonathan Levin
BR Advisory Partners Participacoes SA, the investment bank and asset-management firm founded by Goldman Sachs Group Inc.’s former Brazil chief executive officer, is creating a debt-restructuring advisory business as the country’s economy stalls.
Claudio Citrin joined as a managing director to build the new division, said Andrea Pinheiro, who founded Sao Paulo-based BR Partners in 2009 with Ricardo Lacerda, Goldman Sachs’s former Brazil CEO. Citrin, 52, previously worked as an executive at Spinnaker Capital Ltda for about 14 years, overseeing hedge fund investments in Latin America.
Demand for restructurings may rise amid estimates Brazil has slipped into recession. Credit Suisse Group AG lowered its second-quarter gross domestic product forecast to negative 0.5 percent from negative 0.2 percent this month, and said revisions to the first quarter might also show a contraction. The corporate delinquency rate rose 4.9 percent in the 12 months through June compared with a year earlier, according to data provider Serasa Experian.
“Last year we had a hangover in Latin America after the excess of high-yield investments in previous years,” Citrin said in an interview at BR Partners office in Sao Paulo. “We plan to start working with companies when they first notice their problems and before they lose all their equity value because of reduced credit quality.”
Spinnaker focuses on high-yield and distressed debt in emerging markets. The London-based firm’s investments included OGX Petroleo & Gas Participacoes SA, now called Oleo e Gas Participacoes SA, which defaulted on $3.6 billion in securities last year, a record for emerging markets.
“With the new area we can optimize our labor resources, because the same analysts’ pool working on merger-and-acquisition deals can also work on debt-restructuring advisory cases,” Pinheiro said in an interview. “Usually when one of these businesses is doing great the other is slowing down.”
M&A transactions in Brazil fell 22 percent so far this year to 304, according to data compiled by Bloomberg.
Pinheiro said that because the firm doesn’t provide credit, it avoids conflicts of interest with highly indebted companies, investors or suppliers in restructuring cases.
Citrin was invited to join BR Partners by Jose Flavio Ramos, who was approved by the central bank this month to be CEO for BR Partners’ Banco de Investimento SA, the firm’s investment-banking unit. Lacerda will continue as CEO for the holding company.
Ramos, 56, joined BR Partners two years ago after spending four years managing the fortune of Joseph Yacoub Safra, owner of the Safra global banking empire and the second-richest man in Brazil, according to the Bloomberg Billionaires Index.
Prior to that, Ramos was a managing director for the proprietary-trading area for Citigroup Inc. in Brazil, where he worked for 23 years and met Citrin, who started as an intern for New York-based Citigroup. It was also there that Ramos met Lacerda, who was head of investment banking for Brazil from 2005 to 2009 and co-head for Latin America from 2007 to 2009. He was Goldman Sachs’s Brazil CEO from 2001 to 2005.
Roberto Hollander, a former Banco Bradesco SA executive, was hired as risk director for BR Partners, and Claudio Omagari, a former managing director at Citigroup, will head the bank’s treasury business, the company said.
BR Partners has 2.3 billion reais ($1 billion) in assets under management and reported 21 million reais in profit last year. The firm, with 106 employees, helped companies issue about 200 million reais in bonds backed by real estate receivables known as CRIs during the past year, according to Ramos.