Photographer: Dado Galdieri/Bloomberg

BTG Pactual Said to Consider Deal to Take Company Private

  • Management said to negotiate with outside partners for buyout
  • Expects to repay deposit-insurance-fund loan in first half

Grupo BTG Pactual, the Brazil investment bank that obtained rescue financing after its founder was arrested in November, may repay the bailout in part with proceeds from the sale of its Swiss wealth-management business and pursue a plan to buy out public shareholders, two people with direct knowledge of the matter said.

BTG management is negotiating with potential partners for help in purchasing the 116.7 million shares that trade on the Sao Paulo exchange, one of the people said, asking not to be identified because no final decision has been made. BTG’s eight top partners already own a controlling stake in the company. At Friday’s closing price of 16.20 reais, the publicly held shares are worth about 1.9 billion reais ($482 million).

BTG jumped 12 percent to 18.03 reais, the biggest increase in more than two months, after Bloomberg reported the plan to delist.

The firm, which said Monday it sold its BSI unit for 1.33 billion Swiss francs ($1.3 billion), plans to repay the 5.2 billion reais it owes to the nation’s deposit-insurance fund, known as FGC, before July, the people said. The Sao Paulo-based company had about 11 billion reais in cash as of December, according to one of the people.

An official at BTG declined to comment. The people didn’t identify potential partners.

BTG, which has owned BSI for less than a year, is selling assets to shore up cash after former Chief Executive Officer Andre Esteves was arrested as part of a nationwide corporate-corruption scandal. Esteves, who has since been released from jail and is under house arrest, has denied any wrongdoing through his lawyers. BTG has said it’s not part of the investigation.

EFG International AG agreed to buy the BSI unit in a cash and stock transaction, the Zurich based firm said Monday. The purchase price surpassed the 1.25 billion Swiss francs BTG paid for BSI in September.

Pedro Bueno da Rocha Lima, BTG’s head of investor relations, said the bank expects to receive up to 1.6 billion Swiss francs when the BSI sale is completed, incorporating profits and other gains included in the deal. About 1 billion Swiss francs will be in cash and the rest in the form of a stake in the entity combining BSI and EFG, Lima said. BTG’s stake, which it intends to retain, will be about 30 percent of the company, Lima said.

“That is in line with our strategy of geographic and revenue diversification," he said. Lima declined to comment on the delisting or the plan to repay FGC. He said BTG has made no decision yet on what to do with the cash from the BSI deal.

BTG raised 3.66 billion reais with an initial public offering in April 2012 that priced the stock at 31.25 reais. The shares trading on the Sao Paulo exchange are about 13 percent of the total 918.7 million as of Dec. 29, according to data compiled by Bloomberg.

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