BTG Pactuals IPO, expected in April, should reopen the Brazilian equity markets and re-capitalize the investment bank ahead of an acceleration in its global expansion plans.
BTG, led by Andre Esteves, has selected Banco Bradesco BBI, Goldman Sachs and JPMorgan to lead the transaction. The valuation was not yet clear as Euromoney went to press but its recent acquisition of Chilean firm Celfin Capital valued BTG at $15 billion.
The bank needed recapitalization after a series of recent acquisitions. The Chilean deal followed the acquisition of PanAmericano (R$450 million $248 million for 51%) and Brazilian Finance & Real Estate, the countrys biggest issuer of real estate-backed securities, for R$1.2 billion.
BTG is expected to be aggressive on valuation, but Luis Santacreu, analyst at Brazilian ratings agency Austin, thinks the banks management should be successful in selling itself despite the poor recent performance in IPOs none has priced in Brazil since July 2011.
"The story they have been telling in the last couple of years is very successful," Santacreu says. "The market would welcome the deal. By raising money in the IPO the bank will be more capitalized and ready for further acquisitions in Brazil or Latin America. They have the experience of acquiring PanAmericano, which was its first step in the retail business, and the IPO increases the possibility of BTG growing in retail and wholesale banking, as well as keeping their position in investment banking."
However, Ceres Lisboa, analyst with Moodys in São Paulo, pours cold water on the prospects for any further retail expansion. "The retail side is being carried out by PanAmericano. From what I see, the operation of PanAmericano was not in the same risk-positioning and business line as they were expecting and theyve been doing a lot of moves and strategic changes there," she says. "The retail footprint has not been as easy as they thought it would be. I dont know if they would extend something they dont yet fully understand."
A source who has seen the IPO documentation says the retention policy is unusual but will please investors, who will be keen to ensure the senior management remains in place to lead the expansion: "I havent seen anything like it before," he says. "It effectively ties the key team in for the long term."