BTG Offers Shareholders $1 Billion Stake in Commodities Unit

  • Bank’s investors will vote on spinoff plan on July 14
  • Shareholders would have a 13% stake in Engelhart unit

Grupo BTG Pactual, Brazil’s only publicly traded investment bank, proposed giving shareholders a stake of as much as $1 billion in its commodity-trading unit as it spins off the business.

Investors will vote on the plan to separate the subsidiary, Engelhart CTP Group SA, on July 14, according to a regulatory filing Wednesday by Sao Paulo-based BTG. Once the deal is completed, BTG minority shareholders would have a stake of 13 percent in Engelhart, the bank would hold about 34 percent, and BTG partners would retain 46 percent. Engelhart management would hold the rest, according to the filing.

BTG is trying to retain talent and shield the business from fallout after the bank’s founder and former chief executive officer, Andre Esteves, was arrested in November as part of a corruption investigation, according to a person familiar with the plan. Esteves was released from prison and put under house arrest in December, and then freed in April. He had denied any wrongdoing through his lawyers.

Under the plan, BTG will give investors a new type of shares, with each one equivalent to 93 percent of the bank’s traded stocks. Shareholders will have a certain amount of time, which hasn’t been set yet, to decide whether to convert the new securities into stock of Engelhart. BTG expects to conclude the spinoff during the third quarter, the company said.

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