Bloomberg Monday reported that Goldman Sachs Group Inc. (GS) is increasing its Brazil workforce by about 20 per cent this year to expand in an economy that’s growing more than twice as fast as the company’s home market.

According to Bloomberg, the Brazilian unit, which raised headcount to about 300 from 200 last year, plans to invest during 2011 in research, asset management, private banking, sales, investment banking and trading.
 
Speaking to Bloomberg, the group’s president, Valentino D. Carlotti, revealed the plans in a video-conference interview last week from Goldman Sachs’s headquarters in New York.

According to Carlotti, the company has been growing a lot in Brazil over the past couple of years, but it still sees significant opportunities to continue to build.
 
According to Bloomberg, U.S. and international banks are competing against Brazil- based companies such as Banco Itau BBA SA and Banco BTG Pactual SA, which have used their stronger local contacts to squeeze out foreign firms.
 
Investment-banking fees in Brazil were about $1 billion to $1.5 billion last year industry wide, two dealmakers said last month, asking not to be identified because they aren’t authorized to speak publicly, reported Bloomberg.

Goldman Sachs only completed its strategy to become a full- service bank in Brazil in late 2009, after two failed attempts to buy local firms.
 
The Bloomberg report further indicated that investment banks are turning to emerging markets to tap faster growth. After expanding 7.5 per cent last year, the highest growth in more than two decades, Brazil’s economy is expected to grow 4 percent this year.

Goldman Sachs, which doesn’t separately disclose Brazil revenue or profits, said its strategy in the country is to focus on more complex products that generate higher profit margins, such as convertible debt and receivables securitization, reported Bloomberg.

According to Bloomberg, among Goldman Sachs’s current deals in Brazil is a 300 million reais ($189 million) convertible-bond sale by Minerva SA, Brazil’s fourth-largest meat producer.
 
The structure allows the company to sell debt without increasing leverage because the securities become equity when they mature. Investors receive a set coupon until the conversion, and then can benefit if the shares gain, said Bloomberg.

The Goldman Sachs Group, Inc. is an American bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients.

27th June 2011