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Traders work on the floor of the Brazilian Mercantile and Futures Exchange in Sao Paulo Jan. 23, 2008. Brazilian investment banking giant, BTG Factual, is launching its IPO. (PAULO WHITAKER/PAULO WHITAKER/REUTERS)
Traders work on the floor of the Brazilian Mercantile and Futures Exchange in Sao Paulo Jan. 23, 2008. Brazilian investment banking giant, BTG Factual, is launching its IPO. (PAULO WHITAKER/PAULO WHITAKER/REUTERS)

Markets

BTG Pactual IPO raises $1.96-billion Add to ...

BTG Pactual and its shareholders raised 3.656 billion reais ($1.96-billion U.S.) in Brazil’s first initial public offering of an investment bank, in a show of confidence in the firm and its billionaire founder, André Esteves.

BTG Pactual and its shareholders sold a total 117 million units, a combination of common and preferred stock of its investment and private equity units, at a price of 31.25 reais each, according to information posted on the securities regulator CVM’s website on Tuesday. That was within the suggested price range of 28.75 reais and 33.75 reais.

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The amount sold fell short of the 121.5 million units that BTG Pactual and partners had on offer. The deal values the São Paulo-based bank at about 27 billion reais, making it Brazil’s 16th-biggest listed company by market capitalization.

The IPO, which gave investors the chance to buy into a fast-growing firm with aspirations of rivalling global giants like Goldman Sachs Group Inc. , is Brazil’s first by an investment bank and the nation’s largest since Banco Santander Brasil’s $7.5-billion IPO in October, 2009.

The deal comes as Brazil’s once-hyped IPO market is struggling to regain momentum as investors remain wary of overpriced deals. Last week, car rental company Locamerica became the first to go public in Brazil since last July, when it raised about $165-million.

The Locamerica deal priced below the target range, and prior to that three other attempted IPOs flopped because of market turmoil. By contrast, investors lined up for the BTG Pactual sale, hoping to tap into Mr. Esteves’ success as a deal maker.

BTG Pactual’s own investment banking unit is handling the transaction, along with Banco Bradesco, Goldman Sachs and JPMorgan Chase & Co.

Mr. Esteves, a 43-year-old mathematician who started as a computer technician at Banco Pactual at age 21, rose to become managing partner and sold the bank to UBS AG in 2006 for $3.1-billion. He and some partners bought back Pactual for $2.5-billion in 2009 and formed BTG Pactual.

When Mr. Esteves was at UBS, Italian regulators say he used privileged information to profit from a planned joint venture between Italian meat company Cremonini and Brazil’s JBS. Last week, Mr. Esteves was fined €350,000 in the case. Mr. Esteves, who denies the charges, plans to appeal.

BTG Pactual has been on a deal-making frenzy in Brazil and beyond in recent years as Mr. Esteves tries to make it the largest investment bank in emerging markets by 2020.

The bank has spent at least $2.5-billion on acquisitions in real estate, finance and services, all areas that have blossomed in recent years in lockstep with Brazil’s economy. It also helped rescue troubled lender Banco PanAmericano in 2011, using it to build a consumer and mortgage lending business.

 
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