GIC, CIC in $1.8bn Brazil bank deal

The two Asian sovereign wealth funds have teamed with US private equity firm JC Flowers, Ontario Teachers' Pension Plan and others to acquire roughly a 19% interest in Brazil’s BTG Pactual.

Brazilian investment bank BTG Pactual has agreed to issue $1.8 billion of new shares to an international consortium including JC Flowers, the Government of Singapore Investment Corporation, the China Investment Corporation, the Ontario Teachers’ Pension Plan Board, the Abu Dhabi Investment Council and a number of family offices.

The shares represent roughly a 19 percent interest in BTG Pactual, and upon completion of the transaction, the consortium will have the ability to nominate three directors to BTG Pactual’s board. BTG Pactual will have shareholders’ equity of approximately $4.3 billion once the deal has closed.

Chris
Flowers

Proceeds of the share issuance will be used to develop BTG’s core investment banking, asset management and wealth management activities in Brazil and internationally. The partners of BTG have not sold any shares in the transaction and have agreed to retain their interests “for an extended period”, according to a statement.

UBS acquired BTG Pactual for $2.6 billion in 2006, keeping on the bank’s chief executive officer Andre Esteves. Esteves left UBS in 2008 to start hedge fund BTG, and in 2009 bought Pactual back from UBS for slightly less than what he sold it for, according to the Wall Street Journal.

BTG Pactual is one of the largest wealth managers in Brazil, with offices in Sao Paulo, Rio de Janeiro, New York, London and Hong Kong. The bank has roughly $18 billion under management.

Latin America is proving to be one of the most attractive regions for emerging market private equity investment in the world today. According to data from the Latin American Venture Capital Association (LAVCA), investments in the region in the first half of 2010 reached $3.8 billion, surpassing the $3.3 billion put to work in all of 2009. Total funds raised for Latin America during the first six months of the year reached nearly $3.1 billion, putting 2010 on a similar track to the record-breaking year of 2008, when $6.8 billion was raised.