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The award for the country’s best investment bank goes to BTG Pactual, which returns to the top of its field.
Its stumble on key-man risk, with the arrest of former chief executive André Esteves, prompted a liquidity crisis – and an existential one – that shook the bank to its core. The bank survived – it allowed redemptions across its many areas to maintain its market reputation. Now under the leadership of CEO Roberto Sallouti, BTG Pactual re-scaled, refocused and has returned.
After the election of president Jair Bolsonaro, who swept to power promising a swathe of economic liberalization, the market salivated at the prospect of a flood of investment banking activity. To date, activity has been more muted than it had been hoped; nonetheless, volumes in all segments are improving and the momentum is building.
Local investors have driven the majority of demand for risk assets so far this year. While international investors have largely been standing on the sidelines, locals, private bank clients and even retail investors have been seeking to add risk to portfolios that have seen Selic-linked investment returns shrink. This has led to a boom in local debenture issuance: by the end of May there had been 228 local issues in Brazil worth R$65 billion ($17 billion), compared with 78 worth just R$6.5 billion in 2018.
This dynamic has put international banks at a disadvantage – while some heads of Brazil for the global investment banks say they would like to develop local debt market capability, it’s a near-impossible sell to headquarters as a good use of precious bank capital.
BTG has enjoyed a strong year in the product, coming third in fee generation, despite pursuing more of a distributional model than other local players, which often hold on to these credits within the bank.
For a largely non-balance sheet-driven bank, BTG Pactual also had a very strong year in international DCM, claiming third spot in fee generation (11.2% share) from 48 deals worth a combined volume of $2.8 billion (a 9.44% market share)
In M&A, BTG Pactual claimed second spot with a market share of 31.3% behind Itaú (32.2%) in terms of deal volume (first in number of deals).
It also continued to attract mandates from outside the region. BTG Pactual was the sole financial adviser to New Steel and its shareholder the Lorentzen Group in its sale to Vale. It also advised Enel on the public takeover of Eletropaulo – evidence that the bank’s reputation as a Brazilian expert is developing prospects for more non-domestic M&A mandates.
In ECM, BTG managed to perform, despite the trend of global banks sweeping in to take the country’s best tech companies to New York for IPOs. The bank got between Morgan Stanley and Goldman Sachs, at the centre of this trend, coming second in the league table after Morgan Stanley’s 16.9% market share from nine deals worth a combined $1.5 billion. BTG registered 10 deals worth $1.1 billion for a 12.3% market share, pipping Goldman’s $1.0 billion (12% market share) from four deals.
BTG Pactual’s momentum has been improving since the end of the qualification period for these awards (March 31, 2019) and next year the bank could take the ECM crown in Brazil: it has been the left bookrunner and/or global co-ordinator in 11 out of the 17 completed or live deals.