Report: JPMorgan in talks to buy Brazil firm

The bank is reportedly in ‘advanced discussions’ to acquire Brazilian investment firm Gávea, which closed its third fund in 2008 on $1.2bn.

JPMorgan is reportedly in talks to acquire Brazilian investment firm Gávea Investimentos. The US bank already owns hedge fund Highbridge Capital Management and private equity shop One Equity Partners.

JPMorgan declined to comment.

The Financial Times reported Monday the bank was in “advanced discussions” to acquire the firm, which manages about $5.3 billion in assets. Gávea was founded in 2003 by Arminio Fraga and Luiz Fraga. Arminio is the former president of Brazil’s central bank.

No deal has been finalised, according to the FT.

This wouldn’t be the first time a western bank has acquired a Latin American financial company. In 2006, UBS acquired Brazil investment bank BTG Pactual for $2.6 billion, keeping on the bank’s chief executive officer Andre Esteves. Esteves left UBS in 2008 to start hedge fund BTG, and in 2009 he bought Pactual back from UBS for slightly less than what he sold it for, according to the Wall Street Journal.

Gávea’s illiquid strategy includes the ability to do both traditional private equity deals as well as private investments in public entities. The firm, which controls capital across a number of asset classes, was originally founded to focus on hedge funds. The private equity arm was launched in 2006 with the raising of $350 million for the debut fund.

Gávea collected $1.2 billion for its third fund in 2008, the bulk of which came from US endowments and other institutions. Harvard Management Company purchased a 12.5 percent stake in Gávea’s management company, but as of press time it was unclear if Harvard still retained its stake in the firm.

One of the firm’s big private equity deals was the backing of Azul airlines, a Brazilian budget airlines led by JetBlue founder David Neeleman. The firm recently joined an investor group led by DLJ South American Partners in a $370 million investment for a 25 percent stake in Grupo Santillana de Ediciones, a publisher of educational text books in Latin America and Spain.

The investor group in the Santillana deal also included JPMorgan’s Highbridge through the firm’s mezzanine arm.

Private equity activity in Latin America has been heating up over the past few years, and Brazil has been the most attractive destination for private equity. The Carlyle Group, Apax Partners and First Reserve have all made investments in Latin America this year.

Advent International, earlier this year, raised the largest-ever private equity fund for Latin America, collecting $1.65 billion in commitments.