Brazil's biggest investment bank BTG Pactual is to sell a $1.8 billion stake to a group of investors including the Rothschild and Agnelli families as well as Middle East and Asia funds. Italian investment holding Exor SpA, controlled by the Agnelli family, is participating in the group of international consortium that would acquire 18.65 per cent of the capital in BTG Pactual.

The international group of investors will buy BTG Pactual new-issue shares. The group will own about 19 percent of BTG following the transaction. Esteves and his partners bought Banco BTG Pactual, Brazil’s biggest equity underwriter, back from UBS AG for $2.5 billion last year.

BTG, which cited market conditions for canceling an initial public offering in June, is expanding its mergers advisory and underwriting businesses as Latin America’s largest economy grows at the fastest pace in more than two decades.

On a press conference call with reporters Monday, Esteves said it’s the first transaction of this magnitude in the region and a very special transaction given the fact that BTG Pactual is an emerging-market bank.

BTG, based in Sao Paulo, managed $3.07 billion of Brazilian equity sales this year, putting it in seventh place among the country’s top underwriters. The bank advised on 42 mergers and acquisitions involving Brazilian companies that totaled $24.9 billion, according to data compiled by Bloomberg.

The share sale by Petroleo Brasileiro SA in September caused a “big distortion” in those rankings, Esteves said. The bank’s priority is “to maintain the leading position we have in Brazil,” he said. “You can’t have a solid international presence if you don’t have a solid domestic position, he added.”

Brazil’s gross domestic product will expand 7.54 percent this year, according to a central bank survey of economists published today. Economic growth is benefitting from rising domestic demand and foreign direct investment, which increased 26 percent in October from a year earlier to $6.77 billion, the highest since December of 2008.

One of the goals of the transaction is to support the plans of the bank’s new partners to invest in Brazil, according to Esteves. Those investors have a “rich agenda” for Brazil and Latin America that includes infrastructure projects, which are being announced on a “daily basis,” he said.

Brazil’s central bank may keep borrowing costs unchanged at 10.75 percent this week after raising the benchmark interest rate by 200 basis points, or 2 percentage points, from a record low to prevent an “overheating.”

7 Dec 2010.