BTG Pactual Said to Plan $1.6 Billion Commodities Arm Spinoff

  • Unit will be known as Englehart Commodities Partners
  • Separation follows arrest of BTG founder Esteves in November

Grupo BTG Pactual is spinning off its commodity-trading unit and renaming the division Engelhart Commodities Partners in a deal valuing the business at about $1.6 billion, according to a person familiar with the matter.

The bank is planning to announce the deal today, said the person, who asked not to be identified because the information isn’t public. BTG has been considering plans to grant equity in the unit to top managers and traders, two people with knowledge of the situation said in February.

The formal separation of the commodity-trading house, headed by Chief Executive Officer Ricardo Leiman, is designed to retain talent and insulate the unit from the Brazilian bank following the arrest of its founder and former CEO Andre Esteves in November in a corruption investigation. Founded in 2013, the commodity-trading arm has been a bright spot for BTG amid troubles at other operations. The business has grown rapidly in three years to secure a place behind some of the world’s biggest trading houses.

BTG declined to comment.

While commodity producers have suffered amid plunging prices, many traders have thrived thanks to increased volatility and a market structure called contango, which allows them to lock in profits by storing oil and petroleum products for future sale at higher prices. Trading houses including Trafigura Group and Gunvor Group Ltd. reported record profits from oil trading in 2015.

Esteves, who has denied any wrongdoing, was released from prison on Dec. 17 and has since been under house arrest. BTG, which has said it isn’t being investigated itself, is selling assets in the wake of the probe and the arrest.

BTG said Thursday in a regulatory filing that a four-month review by a special committee of directors and outside counsel found no evidence to support allegations of corruption against Esteves.

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