US and European fund managers are snapping up stakes in Brazil’s small, specialist fund boutiques. They are looking to gain exposure to some of the world’s fastest-growing financial markets, diversify revenues, and capture the huge Brazilian shift out of bonds into equities and other assets. For their part, Brazilian managers are gaining know-how, technology and access to well-oiled marketing machines.
Most recently, BNY Mellon acquired ARX Capital, increasing assets under management in Brazil from some $2 billion to more than $4.6 billion. Earlier last year, Harvard Management Company took a 12.5% stake in Gávea Investimentos at an undisclosed price, and the Brazilian subsidiary of Portugal’s Banif took over Nitor to create Banif Nitor Asset Management. These deals follow Credit Suisse’s purchase of a stake in Hedging Griffo and UBS’s takeover of Pactual.
Foreigners are developing a taste for long-term direct investments, not just portfolio plays, says Luiz Fernando Figueiredo at boutique Mauá Investimentos. Interest comes just as local managers branch out into longer-term investments, such as private equity and venture capital. He adds that investment banks are actively seeking acquisitions and are likely to lead the next wave of buyers. The concept is solid, he reasons: demand for funds is outstripping supply, with many funds closing for long periods to investment.