BTG Pactual


BTG Pactual is a Brazilian financial company that operates in the markets of investment banking, wealth management and asset management. It offers advisory services in mergers and acquisitions, wealth planning, loans and financings, as well as investment solutions and market analyses. It's the biggest investment bank in Latin America and the Caribbean. Also the 5th biggest bank in Brazil.
With headquarters in Rio de Janeiro and São Paulo, the clients of the bank – which began as a brokerage firm in 1983 in Rio de Janeiro – are companies, retail and institutional investors, as well as municipal, state and federal governments. With assets of and shares traded on the BM&F Bovespa and NYSE Euronext, BTG Pactual has offices primarily in Latin American cities and in the world's leading financial centers.
BTG Pactual is controlled by Roberto Sallouti, Marcelo Kalim, Claudio Eugênio Stiller Galeazzi, Eduardo Henrique de Mello Motta Loyo, Guillermo Ortiz Martínez and John Huw Gwili Jenkins. André Esteves, who used to be the Chairman and CEO of the bank, currently holds the Senior Partner position. The restructuring of governance occurred following legal problems involving Esteves. On July 12, 2018, Esteves was acquitted by the Federal Justice for lack of evidence, and his case is already considered a judicial error.

Business lines

Investment banking

As a consultant or financier, BTG Pactual helps companies, other financial institutions and governments to obtain funding via the issuance of securities, and structured and guaranteed loans. It also provides services in M&A, IPOs, FX operations, as well as trading in derivatives and commodities.

Asset management

With a focus on institutional clients, it offers consultancy and investment solutions in fixed income, money markets, public and private equity, as well as stock, receivables-backed, real estate, hedge and private equity funds.

Wealth management

BTG Pactual area responsible for managing customized investment portfolios for High Net Worth individuals. It also offers financial advisory services to families that need to protect and expand their wealth, as well as succession and real estate planning.

Timberland Investment

BTG's timberland investment group is responsible for agribusiness and timberland management, including tree farms and natural forests.

Main financial indicators

BTG Pactual, the main investment bank in Latin America, has the following financial results :
BTG Pactual was formed by Banco BTG Pactual and BTG Pactual Participations. The latter is the managing partner and controller of BTG Investments. Banco BTG Pactual is the main operating company of the group. On 15 September 2015, BTG Pactual acquired Banca della Svizzera Italiana. Founded in 1873 in Lugano, BSI specializes in wealth management for private and corporate clients.

History

BTG Pactual began in 1983 in Rio de Janeiro as the brokerage firm Pactual DTVM, when its initial and primary activity was proprietary trading and securities sales and trading. From day one, the founding partners agreed that the new financial organization would be based on concepts such as meritocratic partnership, hard-working, hands-on and entrepreneurship. The following years were important for the bank, such as in 1986, the asset management and investment bank areas were created. In 1989, the bank opened its São Paulo's office and started the internationalization of operations. Eleven years after the foundation, the bank started the wealth management activities.
In 1998, the company underwent an organizational changes that resulted in the replacement of the former executive officers by a team led by André Esteves, Eduardo Plass, Marcelo Serfaty and Gilberto Sayão. The change in management also gave the bank a new strategic direction and began developing its client facing business as a way to diversify its sources of revenue and create a franchise in the Brazilian financial markets. At the end of this same year, the bank acquires Banco Bamerindus. In 2000, the bank opened Pactual Asset Management S.A. DTVM and an office in Cayman Islands. In 2003, the expansion continued with more office in Brazil, in the cities of Belo Horizonte and Recife.
In 2006, the UBS bought Banco Pactual for US$2.5 billion and created UBS Pactual, André Esteves became CEO of all UBS' Latin American operations. Two years later, Esteves left the bank to found BTG Investments, an alternative asset management company, along with nine other founding partners of UBS and UBS Pactual, including Pérsio Arida, a former president of the Brazilian Central Bank. In 2009, BTG buys out UBS shareholders and creates Banco BTG Pactual. In the following year the bank issued US$1.8bn in capital, representing 18.65%, to a group of international investors and partners. In 2011, they acquired 51.00% of Banco PanAmericano shares. In 2012, BTG Pactual bought brokerages in Chile and Colombia, Celfin Capital and Bolsa y Renta. And held an initial public offering raising R$3.65 billion, making it one of the 20 biggest companies listed on the BM&FBovespa.
In 2013, the bank, through its subsidiary BTG Pactual Timberland Investments Group LLC, acquired forest asset management contracts from Regions Timberland Group, a division of Regions Bank, the acquisition expanding its investment in forest assets. The deal established BTG Pactual as the biggest independent forest asset manager in Latin America and one of the biggest in the world, with assets of US$3bn and a portfolio of 716,000 hectares of land in North America, Latin America, Europe and Africa. In 2014, it made two acquisitions in Europe, the first was the British reinsurer Ariel Re bought by an undisclosed amount and also acquired Swiss bank BSI, for US$1.7 billion.
In 2017, BTG Pactual bought shares of companies such Anheuser-Busch InBev, Fibria Celulose, Gerdau, Staples and Telefónica Brasil. Roberto Sallouti is currently CEO of BTG Pactual. The bank's management preserved the structure of a company, where all the partners are executives with responsibility in the day-to-day of the organization. The percentages of the company are reviewed annually, according to the individual performance of each partner, new members are invited to buy shares and join the partnership.
In August 2019, Brazil's federal police raided BTG Pactual's headquarters and the addresses of its founder, Andre Esteves. Prosecutors are investigating whether Petrobras, as the state-run company is known, sold stakes in Nigerian oilfields to BTG in 2013 for a value lower than initial assessments by other financial institutions. Following the raid, shares of BTG Pactual decreased in value with more than 11%.

Awards

Insider trading

This case was closed and there was no impact to the public offering. In 2012, penalties for André Esteves' insider trading "force the bank to amend its prospectus, give investors the option to reconsidering bids for BTG shares, and put a cloud over one of this year's highest-profile bank deals." In "a statement, BTG Pactual said Esteves believed the allegations had no merit and was determined to appeal the decision." However, Esteves did not appeal, citing cost and a loss of time as his reasons. In 2013, Charles Rosier, a former partner of BTG Pactual, was convicted in an insider trading case in France. While at UBS, at the end of March and early April 2008, he and his cousin Joseph Raad used inside information to purchase shares and options in SNCF Geodis just before a takeover bid was announced.

Pactual sale to UBS and resale to BTG

Arthur Rutishauser argued that the way 27% of BTG was acquired is an example of an insider case: André Esteves sold the bank in 2006 for 3 billion SFr to UBS, where Huw Jenkins was a key decision maker, and heavily involved in that transaction. Esteves later repurchased Pactual back in 2009 for 2.5 billion SFr after being allowed to leave UBS to set up BTG. Jenkins was ejected from UBS in 2007 and disappeared then resurfaced as a senior partner and board member at BTG Pactual in 2010.

BTG Pactual purchase of BSI

In July 2014, BTG Pactual purchased Banca della Svizzera Italiana, with the purchase being subject to the approval by the Swiss Financial Market Supervisory Authority. The current CEO of FINMA Mark Branson was previously the CEO of UBS Securities Japan Ltd. and reported directly to Huw Jenkins, CEO of UBS Investment Bank who is now a partner and director of BTG Pactual. Branson also worked with André Esteves, now CEO of BTG Pactual, when both worked at UBS on its management committee in November 2007, the time André Esteves committed insider trades. Under Mark Branson, FINMA decided whether to approve BTG Pactual's purchase of BSI, although BTG Pactual wA being owned and operated by former superiors and colleagues Jenkins and Esteves, although it clearly does not implicate any illegal activity whatsoever.

Misrepresentation allegation

The case was closed, a final settlement has been reached. An ex-employee of Hong Kong subsidiary BTG Pactual Asia Ltd, Zeljko Ivic, filed a claim in late 2013 alleging Banco BTG Pactual board member Huw Jenkins and André Esteves made fraudulent misrepresentations to Zeljko Ivic to induce him to sign agreements with the bank. Ivic said he had played a key role in Banco BTG Pactual's initial public offering, which raised funds from nine entities, including the China Investment Corporation, GIC Private Limited, and the Agnelli and Rothschild families, for which Jenkins had promised him a partnership and shares. Ivic, who valued his claim at some US$20 million, started proceedings after being dismissed in October 2013. In March 2017, the parties involved, including Messrs. André Esteves and Ivic Zeljko, reached a final settlement for the above-mentioned disputes, in which the parties have waived any of the rights they may have against the other party in respect of any of the claims.