* Brazil's BTG to pay in cash, stock for Chile's Celfin
* Becomes Latin America's No. 1 independent investment bank
* Billionaire Andre Esteves, partners own 80 pct of BTG
* Looking for more advisory deals in Chile, Peru, Colombia
By Guillermo Parra-Bernal and Aluisio Alves
SAO PAULO, Feb 8 BTG Pactual, the
Brazilian securities firm owned by billionaire financier Andre
Esteves, is buying Chilean rival Celfin Capital for about $600
million as it seeks to win more investment banking and capital
market advisory business in South America.
Under the terms of the deal, Esteves and his partners will
pay $245 million in cash and give Celfin's owners a 2.4 percent
stake in BTG Pactual. The takeover makes BTG Pactual
the largest independent investment bank in Latin America,
further extending its reach into fast-growing economies like
Chile, Peru and Colombia.
Since it was formed it 2009, BTG Pactual has been on a
deal-making frenzy in Brazil and abroad as Esteves, a
43-year-old financial wunderkind, strives to turn the firm into
the largest investment bank in emerging markets by the end of
"The global agenda for Latin America is gaining relevance in
terms of investment inflows, and our goal is to become regional
leaders," Esteves told reporters at the bank's headquarters in
São Paulo's financial district.
BTG Pactual and Esteves himself have become a symbol of
Brazil's growing economic might, competing neck-and-neck with
big global investment banks in a region with bustling capital
markets and booming demand for wealth management services.
The bank has the financial muscle to undertake bigger
takeovers going forward as a $1.8 billion stake sale to a group
of investors led by sovereign wealth funds late in 2010, a low
payout ratio and swelling trading and dealmaking profits, have
beefed up cash holdings, Esteves said.
"We have enough capital for acquisitions," he said, without
elaborating. Esteves spoke besides senior partner Pérsio Arida,
a Brazilian economist credited with helping the government tame
hyperinflation in the mid-1990s.
A source with direct knowledge of the transaction told
Reuters that BTG Pactual agreed to pay $600 million for all of
Celfin, which would value the stock portion of the deal at about
$355 million. The deal valued BTG Pactual shares at about three
times book value, said the source, who is not allowed to speak
publicly on the matter.
Based on such numbers, the Celfin deal would value BTG
Pactual at about $14.8 billion, almost 50 percent more than the
$10 billion valuation it got in December 2010, when investors
led by buyout firm JC Flowers & Co, the two largest Asian
sovereign wealth funds and the largest Middle Eastern sovereign
wealth fund, bought 18.6 percent of BTG Pactual.
Esteves, a mathematician who started as a computer
technician at now-defunct Banco Pactual at age 21 before rising
through the ranks to become its managing partner, sold the firm
to UBS AG in May 2006 for about $3.1 billion. He and
some partners bought back Pactual for about $2.5 billion in 2009
and formed BTG Pactual.
Esteves, alongside senior partners and some of BTG Pactual's
1,300 employees, will own 80 percent of the firm after the
Celfin deal. Forbes Magazine calculates Esteves' net worth at
about $3 billion.
He and his partners have long considered an initial public
offering to bulk up the bank's capital, but postponed the plans
because of volatility in global markets. Last December, he said
an IPO was still possible in the medium term, without
At the news conference, Esteves said BTG Pactual is growing
regionally because a "flatter and more integrated world" is
demanding regional banks to gain a global character. The ability
of BTG Pactual to lure more investment inflows into Latin
America will depend "on us building up a strong regional
franchise with global reach," he said.
The deal, which has been in the works since at least August,
may give BTG Pactual the proximity it needs to win
investment-banking and capital markets advisory mandates in
Peru, Colombia and Chile - thanks to Celfin's contacts with
companies and governments there, Arida said.
TOP BRAZIL M&A ADVISOR
The purchase still requires regulatory approval. Once the
deal is completed, Celfin's 15 main shareholders will become BTG
With Celfin, BTG Pactual will have 129 billion reais ($75
billion) in assets under management and handle about 49 billion
reais for wealthy investors.
In 2011, BTG Pactual topped merger and acquisitions advisory
rankings in Brazil for the second year in a row, as its focus on
retail and other fast-growing segments resulted in $24.05
billion worth of announced deals, according to Thomson Reuters
The firm advised on 52 deals last year. About $78.64 billion
worth of deals were announced in Brazil last year, down from
$120.61 billion in 2010, while the number of agreements rose to
745 from 698.
BTG Pactual's investment-banking unit helped the controlling
shareholders of brewer Schincariol sell a 50.45 percent stake to
Japan's Kirin Holdings for $2.5 billion.
The bank also advised Italian-Argentine giant Techint Group
on its $2.9 billion purchase of a 27.7 percent voting stake in
Brazilian steelmaker Usiminas.