SAO PAULO, March 1 (Reuters) - BTG Pactual, the investment bank controlled by Brazilian billionaire Andrì Esteves, filed plans to sell shares in what is likely to be the country's most coveted initial public offering this year.
The IPO will be the first by an investment bank based in Brazil, an emerging economic power whose financial industry is booming. While the local IPO market has suffered with recent market turmoil, the BTG Pactual offering will give investors the chance to buy into a fast-growing firm with aspirations of rivaling global giants like Goldman Sachs Group Inc.
BTG Pactual, which is based in Sao Paulo, will list common and preferred stock as well as two classes of local depositary receipts. A sale of global depositary units in Amsterdam will take place simultaneously with the Brazil IPO, in which two other shareholders will also sell stock.
Since it was formed in 2009, BTG Pactual has been on a deal-making frenzy in Brazil and abroad as Esteves, a 43-year-old financial wunderkind and the bank's chief executive, tries to make the firm the largest investment bank in emerging markets by the end of the decade.
BTG Pactual and Esteves himself have become symbols of Brazil's growing economic might, competing neck and neck with global investment banks in a region with bustling capital markets and surging demand for wealth management services.
“This deal will pose a litmus test for the Brazilian market; it will give the local market a lot of global visibility,” said Eleazar de Carvalho Filho, managing partner at local investment bank Virtus BR Partners. “I'm sure it will be well-received.” Based on an acquisition it made last month, BTG Pactual is worth about $14.8 billion, which would make it one of Brazil's 20 biggest companies by market capitalization. The 3-year-old bank would be worth more than the combined market value of Brazilian steelmaker Usiminas and Cosan, the world's leading ethanol producer.
The latest valuation for BTG Pactual is also equivalent to 25 percent of that of Goldman Sachs, the world's most profitable securities firm, and 40 percent of Morgan Stanley. BTG Pactual's worth is almost 50 percent more than the $10 billion valuation it got in December 2010, when investors led by buyout firm JC Flowers & Co, the two largest Asian sovereign wealth funds and the largest Middle Eastern sovereign wealth fund, bought an 18.6 percent stake.
Virtus' Carvalho credited BTG's torrid growth and increasing appeal to the bank's aggressive focus on deal-making and merchant banking as well as Esteves' ability to secure the cheapest and most efficient sources of funding for deals.
Bloomberg News reported this week that a 10 percent stake in
BTG Pactual could be offered in the IPO. An external public relations executive working for BTG Pactual declined to comment.
STRATEGY
Details on the size and a timetable for the offering were
not available. BTG Pactual's own investment banking unit will handle the transaction, along with Banco Bradesco, Goldman Sachs and JPMorgan Chase & Co.
The bank will use proceeds from the IPO to expand all areas
of business and strengthen its capital base. The bank requested permission to become a public company in Brazil last August, but Esteves and his partners postponed the IPO because of volatility in global markets.
Esteves, a mathematician who started as a computer
technician at Banco Pactual at age 21, rose through the ranks to become its managing partner and sold the bank to UBS AG in May 2006 for about $3.1 billion. He and some partners bought back Pactual for about $2.5 billion in 2009 and formed BTG Pactual.
All told, Esteves, the bank's seven senior partners and some
of the 1,300 employees own 80 percent of the company. Forbes Magazine calculates Esteves' net worth at about $3 billion.
Esteves, a champion of meritocracy, has boasted for years
about the productivity of BTG Pactual's staff. Last year, average revenue per employee was close to $1.9 million -- three times the combined number for Goldman, Morgan Stanley and Credit Suisse Group.
In addition, compensation amounted to an average $412,000
per employee, compared with $294,700 at those three banks. Yet BTG Pactual spent only 25 percent of revenue on salaries and bonuses last year, compared with an average 48 percent among investment banks.
BTG Pactual has spent at least $2.5 billion on acquisitions
in the past two years in real estate, finance and services, all areas that have blossomed in the wake of strong job creation and resilient wages.
The bank also helped rescue troubled Brazilian lender Banco
PanAmericano early last year, using it as a launching pad for a consumer and mortgage lending giant.
GOLDEN SHARE
BTG Pactual's penchant for takeovers has helped it boost
profit and increase its assets nearly by half since 2010. But it has also taken a toll on the bank's capital base.
BTG Pactual said its capital solvency ratio fell to 17.7
percent at the end of las
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