Esteves Fund Ingests Lehman Brazil

BTG, the Brazil-based startup of Andre Esteves, UBS’s former global head of fixed income, has snapped up Lehman’s Brazil operations for an undisclosed sum. BTG, barely a month in business, is understood to have bought all of the US shop’s Brazil assets, including investment banking, trading, fund-raising, IT infrastructure, and a portfolio of fixed income assets. BTG, whose partners include 11 senior UBS and Pactual executives who left the Swiss bank after it scaled down its risk profile, manages $800m in proprietary funds and is looking to raise up to $1.2bn extra in third party resources over the next several months. It has a non-compete with UBS which precludes any overlapping business. But market participants doubt BTG – many of whose partners are successful bankers – will completely avoid competition. The fact that BTG tapped Lehman’s investment bankers adds fuel to the speculation, although in a statement, BTG says it will discontinue the investment banking activity and withdraw an application at the central bank for a license. Trading competitors of Lehman in Brazil say the shop had a local treasury desk with a portfolio of high yield corporate credit, derivatives, and other fixed income assets. Prior to its implosion, Lehman had been developing a local business centered on procuring high-yielding credit assets and repackaging them for hedge funds and other investors offshore. BTG has offices in Sao Paulo, Rio, New York, London and Hong Kong. The purchase meanwhile undermines Barclays’ ability to leverage its Lehman acquisition in LatAm.