SAO PAULO Credit Suisse Group AG and star fund manager Luis Stuhlberger agreed to set up a new asset management venture with 30 billion reais ($13.6 billion) under his control, extending the Swiss bank's relationship with Brazil's most coveted money manager.
The venture, to be named Verde Asset Management, will open next January, with Credit Suisse and some of Stuhlberger's associates as minority partners, according to a statement. The agreement allows Credit Suisse to retain Stuhlberger, Brazil's most successful fund manager, whose CSHG Verde FIC FIM hedge fund posted total return of about 8,500 percent since its inception in 1997.
The statement confirmed a Reuters report on Wednesday that Stuhlberger would control the venture. Verde Asset Management will oversee the same families of funds that Stuhlberger handles as chief investment officer of Credit Suisse Hedging-Griffo, the bank's money management and private banking unit in Brazil.
"With this, our clients will continue to have access to the best investment options through our large platform of products and services," said the statement, which was signed by José Olympio Pereira, chief executive officer of Credit Suisse's Brazilian unit.
The tie-up between the bank and Stuhlberger began in 2006, when the Swiss bank bought 51 percent of Stuhlberger's investment firm Hedging-Griffo. Since then, the Swiss bank has pocketed over 4 billion reais in profit from Hedging-Griffo.
Under the plan, Credit Suisse and Stuhlberger will propose that clients allow the venture to assume control of funds currently invested in the Verde family, and return about 40 percent of capital in the Verde Master and other vehicles to investors in four six-monthly installments.
Currently, Credit Suisse Hedging-Griffo oversees 65 billion reais in private banking assets and 45 billion reais in its asset management unit. The bank agreed to allow Stuhlberger to have an independent structure ahead of the end of a non-competing clause next year, a source with knowledge of the accord told Reuters.
That type of arrangement is not new for Credit Suisse. Two years ago, the bank helped set up Península Investimentos SA, an independent investment firm to be overseen by Antonio Quintella, a former CEO of the bank's Brazilian unit.
Recently, Credit Suisse hired Fabio Okumura, head trader of Itaú Unibanco Holding SA's proprietary trading desk, and eight of his associates to create new products, another source told Reuters last month.
Brazil's fund industry, the world's sixth-largest with more than $1.2 trillion in assets, has grown rapidly in recent years in the wake of a surge in the number of new millionaires in the second-biggest emerging market economy.
The success of money managers such as Stuhlberger helped lure assets from some of Brazil's newly wealthy to hedge funds specialized in trading everything from commodities to currencies, asset-backed securities and global stocks.
The grandson of Polish immigrants who moved to Brazil in the late 1920s, Stuhlberger began his career as a gold trader more than 30 years ago, and only started to manage client money around 1994. He and his partners sold the remainder of their stake in Hedging-Griffo to Credit Suisse at the end of 2011.
For years, Stuhlberger's stature among global investors has gained prominence not only because of the superb returns he helped produce, but also due to his contrarian and generally accurate views during periods of deep market turmoil.
In 1999 alone, when Brazil was forced to devalue the real in the wake of a local fiscal crisis, the Verde FIC fund had annual return of 135 percent - more than any competitor back then. Stuhlberger outsmarted his peers by betting the government would have to abandon its defense of the currency and allow the real to free-float.
In a letter to investors distributed on Wednesday morning, Stuhlberger pledged to stick with his bet on a decline in Brazil's currency amid mounting concerns over the sustainability of public finances in Latin America's largest economy.
Stuhlberger is taking advantage of a recent rally in Brazilian equities to reduce Verde FIC's exposure to stocks. Since March 17, the benchmark Bovespa stock index has gained 15 percent, driven by mounting risk appetite among global investors and increased expectations that a market-friendly opposition candidate could defeat President Dilma Rousseff in the October election.
"Markets are again under the belief that the future will be better than the present - a powerful elixir for asset prices - whether because the allure of higher interest rates intoxicates foreign investors, or due to rushed analyses regarding opinion polls," he said in the letter.
($1 = 2.20 Brazilian reais)
(Reporting by Guillermo Parra-Bernal; Additional reporting by Brad Haynes and Asher Levine in São Paulo; Editing by Jeffrey Benkoe, Phil Berlowitz, Meredith Mazzilli and Eric Walsh)