GIC and CIC invest in Brazil's BTG Pactual

The Government of Singapore Investment Corporation, China Investment Corporation and Abu Dhabi Investment Council make their first foray into Latin America by participating in a $1.8 billion investment in Brazilian financial services firm BTG Pactual.

Brazilian investment bank BTG Pactual will increase its capital base by $1.8 billion with the introduction of new investors, including the Government of Singapore Investment Corporation (GIC) and China Investment Corporation (CIC).

BTG Pactual is raising $1.8 billion through the issuance of new equity, representing a 18.65% stake, to a consortium of international investors. GIC, CIC, Ontario Teachers’ Pension Plan Board (OTPP), Abu Dhabi Investment Council (ADIC) and private equity firm JC Flowers are contributing the bulk of the investment. Several other investors are participating in the deal, including: RIT Capital Partners and Lord Rothschild’s family interests; the Santo Domingo family's interests; Exor, an investment company controlled by the Italian Agnelli family who founded Fiat; Inversiones Bahia, the holding company of the Brazilian Motta family; and senior management of BTG Pactual.

BTG Pactual will use the capital to develop its core investment banking, asset management and wealth management businesses, both domestically in Brazil and internationally. BTG Pactual’s partners have agreed to a lock-up on their shares pursuant to the investment.

The investor consortium has acquired not only a share in Brazil's leading investment bank, asset manager and wealth manager, but is also building a long-term partnership with a platform that will help develop their access to investment opportunities and enhance their deal-making and execution ability in the region, said sources close to the transaction. The consortium of investors has negotiated the right to have three directors to the board of BTG Pactual, who will be nominated by GIC, CIC and JC Flowers.

Citi was a financial advisor to the investors and also provided foreign exchange, hedging and custody services.

BTG Pactual has a history dating back to 1983 when it was founded as a distributor of securities under the name of Pactual. In 2006, Swiss bank UBS bought Pactual, which had grown into a full-fledged boutique investment bank, for a reported $2.6 billion and renamed it UBS Pactual. A managing partner of Pactual, Andre Esteves, became head of the new firm and subsequently global head of fixed income, currencies and commodities (FICC) at UBS. Esteves quit UBS in 2008 to start a trading firm, BTG Investments, and in 2009 led a buyout of Pactual from UBS and merged it with BTG.

BTG Pactual now has offices in Sao Paulo, Rio de Janeiro, Recife, Belo Horizonte and Porto Alegre in Brazil, as well as in New York, London and Hong Kong. It currently employs around 1,100 people.

The valuation at which the new capital is being raised suggests a post-money equity value of $10 billion for BTG Pactual. The deal is the first time an investment of this size has been made in Latin America by the sovereign wealth funds who are investing.

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