São Paulo – The Abu Dhabi Investment Council (ADIC) is part of a group of investors that is going to spend US$ 1.8 billion on Brazilian bank BTG Pactual, by means of a bond issue, according to United Arab Emirates newspaper The National, and the Brazilian institution. The information was disclosed this Monday (6th).
According to a statement issued by BTG Pactual, the consortium of new shareholders also includes the Government of Singapore Investment Corporation (GIC), the Ontario Teachers’ Pension Plan, based in Canada, JC Flowers & Co, RIT Capital Partners, the Lord Rothschild family, the Santo Domingo Group, EXOR – an investment company ran by the Agnelli family – and Inversiones Bahia, a holding company owned by the Motta family. The group is going to acquire 18.65% of the bank’s capital.
According to the Abu Dhabi newspaper, the purchase reflects the strategy of major international investors, who are injecting funds into emerging markets.
Other funds from Abu Dhabi have already invested in Brazil, among them Aabar Investments, which purchased US$ 328 million in shares of the Santander Brazil bank in October 2009. The Qatari sovereign fund also purchased a stake in Santander, in October this year.
The Abu Dhabi Investment Authority (Adia), the world’s largest sovereign fund, owns a commercial building in the centre of the city of Rio de Janeiro and has investments in the Brazilian capital market.
Last Sunday (5th), Adia signed a memorandum of understanding with the Brazilian Development Bank (BNDES) to prospect for joint investment opportunities. The signing took place during a mission of the Brazilian Ministry of Development, Industry and Foreign Trade to the Middle East.
According to a statement issue by BTG Pactual, the bank’s CEO, André Esteves, has stated that "this capital inflow from a consortium of such quality will enable BTG Pactual to consolidate its position as one of the leading investment banks and asset management institutions based in emerging economies." Once the transaction has been completed, the consortium of investors will get to appoint three representatives for the Board of Managers at BTG Pactual.
In an interview to the Abu Dhabi newspaper, Victoria Barbary, an analyst for London-based consultancy firm Monitor Group, "Two to three years ago the emerging markets that sovereign funds invested in were either in Asia Pacific – China, Indonesia and Singapore – or they were in the Middle East." "We rarely saw them investing anywhere else," she added. Now, however, they have begun including India, Russia and Brazil, as well as other Latin American countries.
"Basically, it is sovereign funds beginning to wake up to Latin America as a market," Barbary said. "There’s a perception that especially Brazil is a very strong market and that its growth base is much more diverse than the Middle East," finished off the analyst.
BTG Pactual has operations in the Brazilian cities of São Paulo, Rio de Janeiro, Recife, Belo Horizonte and Porto Alegre, as well as New York, London and Hong Kong. The group has been active on the Brazilian and international markets for 27 years now and has 1,100 employees.
*Translated by Gabriel Pomerancblum
