Pactual Sale Gains Big Adherent

A rumored initiative to have UBS sell its Pactual investment banking unit just got a significant boost from an unexpected party. On Thursday, Luqman Arnold, a former CEO of UBS ousted in 2001 and whose fund today owns a $450m stake in the bank, sent UBS top brass a letter calling for major changes at the firm, including a sale of Pactual. Separate from Arnold’s public proposal, an internal movement headed by former partners of Pactual to buy back the shop is rumored to have been underway for months. And Andre Esteves, the former CEO of Pactual who was elevated to head UBS’ fixed income and currencies division out of London, was also heard to have proposed a Pactual buyback to the Swiss bank’s top managers – a surprising move given the fact that he spearheaded the sale in 2006. Local bankers away from UBS say he was joined by Jorge Paulo Lemann, the billionaire founder of GP Investments, in an offer for the shop he ran for years in Rio. UBS denied Esteves is in talks to buy back Pactual and maintains it wants to keep the Brazil unit, which garnered significant profit in 2007.