Yearly Archives: 2008

Andre Esteves, the head of fixed income at UBS and the chairman of its LatAm business, was apparently in talks with Jorge Paulo Lemann, a founder of GP Investments, to buy out Pactual’s investment banking unit, say executives within and outside the Sao Paulo-based firm. Esteves was apparently approached by former Pactual partners at UBS to help them take back the boutique sold to the Swiss bank for $2.5bn in December 2006. Already discontented with being employees of the global bank, a number of partners became incensed when they found out their year-end compensation might be delivered partially in stock – a stark change to the all cash bonus culture of Pactual, says an executive at the shop. In February, local paper Valor reported UBS had rejected a buyout offer from Esteves and Lemann, two of Brazil’s wealthiest businessmen, worth over $1bn each. “Andre Esteves is not in discussions with any party or parties concerning the possible acquisition of all or part of the businesses of UBS Latin America,” says a UBS spokeswoman. “Andre Esteves remains committed to the strategy of UBS Investment Bank and his leadership of the [fixed income, currencies and commodities] business.” The alleged Esteves pitch, which comes just months after the Brazilian executive was elevated to head the bank’s ailing fixed income division, appears to undermine the sense that the merger between Pactual and UBS is running smoothly. The defection of Alexandre Bettamio, former co-head of Brazil investment banking, last week to Merrill is another sign that relations are frayed.

JPMorgan has relocated the headquarters of its treasury and security services unit for LatAm to Sao Paulo from New York. The move includes the relocation of unit head Mike McKenzie. The shop recently hired Leonardo Lima as head of treasury and securities services in Brazil and treasury services products for LatAm, and appointed Jose Antonio Serrano executive director and country head for Mexico. The treasury services unit offers payment, collection, liquidity and investment management, trade finance, logistics, commercial card and information solutions. “Other US and international banks manage Latin America from New York or Miami. We feel that it is extremely important for us to be in the region every day, closer to our clients and the markets,” says McKenzie.

Citi has cut its EM GDP growth forecast by 0.4 percentage points in 2008 to 6.1%, and 0.5 percentage points in 2009 to 5.8%. “In the absence of a serious commodity downturn, our forecasts for the commodity producers in Latin America are the least affected across emerging markets,” says the shop. “That said, a number of countries show real appreciation that seem out of line with their current account positions or their overall vulnerability to external shocks.” This includes Brazil, where Citi says, “appreciation looks aggressive relative to its current account position” and may reflect a high interest differential. “We expect that differentiation to widen further in coming months as the Fed cuts policy rates and Brazil hikes them,” adds the shop. It also warns that Brazil could face a more serious downturn in risk appetite or a more rapid growth deceleration that triggers less aggressive rate moves.

Vision, the Sao Paulo-based asset manager, is close to wrapping up capital raising for a renewable clean energy company sized at close to $400m. “We’re seeing interesting flow – there is appetite from investors,” says Amaury Junior, founder of Vision, who runs the new entity. The company, which has already amassed about $285m, will focus on energy generated from ethanol and cane bagasse, as well as building a portfolio of small hydroelectric plants. Vision started roadshowing the offer during November’s choppy period. “We were quite successful, given the market conditions, through the capital raising,” says Junior. A last round of fund raising is planned for later in the year. Vision in general is getting more into alternative investment, including private equity. It raised the first $70m tranche of a $300m Brazil real estate private equity fund last week. The vehicle is a joint venture with Moore Capital that aims to purchase and retrofit office space, develop low-income housing and seek out other real estate-related opportunities.