As a tale of how emerging market institutions are preying on
the Wests fallen angels, BTG Pactuals acquisition
of UBSs Brazilian business last year is as dramatic as
they come. Spearheaded by the now-legendary André
Esteves, the $2.5 billion deal is slightly less than the $2.6
billion sum for which Esteves sold the units to UBS as CEO of
Pactual in 2006.
BTG Pactual is now one of the largest independent investment
banks based in the emerging markets. Capitalizing on UBSs
depleted firepower, the acquisition also reflects the
remarkable reversal of fortunes between the Swiss financial
firm and the Brazilian star banker.
Esteves left UBS in June 2008 after his bid to snap up parts
of its emerging markets business failed. Had Esteves stayed at
UBS, his brief would have focused on reducing risk, cutting
costs and enacting a more conservative business strategy to
satisfy financial regulators.
But at the helm of a bank with, as of March, $2 billion in
equity and $34 billion under management, Esteves continues to
chase new business. Over the past year, BTG Pactual became the
biggest bookrunner of equity deals in Brazil; it shored up its
debt distribution capacity; and it is in the process of raising
a $1 billion private equity fund. The bank is also firmly
focused on internationalizing its brokerage and asset
management capacities by opening offices in London and New
Estevess risk appetite is legendary. At the same time,
the woes of his former employer should serve as a cautionary
tale of the dangers of expansion mixed with leverage.