Cerberus eyes BTG Pactual assets as bank sells units

SAO PAULO (Reuters) - U.S. buyout firm Cerberus Capital Management LP has shown preliminary interest in Grupo BTG Pactual SA’s stake in debt collection company Recovery do Brasil, which the embattled Brazilian investment bank wants to sell to raise cash, a person with direct knowledge of the matter said on Thursday.

The logo of Brazil's largest fixed-line telecoms group Oi is seen inside a shop in Sao Paulo October 2, 2013. REUTERS/Nacho Doce

At the same time, the source said, Cerberus [CBS.UL] is considering a role in BTG Pactual's effort to find a partner for telecommunications provider Oi SA OIBR3.SA, in which the bank's Caravelas investment vehicle holds an almost 8.0 percent voting stake.

The source, who requested anonymity to speak freely, declined to give a timetable for any decision on a potential investment.

Following last week’s arrest of BTG Pactual founder André Esteves, new management is rushing to sell pools of loans, stakeholdings and other assets to raise cash and restore investor confidence. A source familiar with the bank’s strategy said the proceeds have helped BTG Pactual replenish cash as asset management clients have withdrawn cash.

BTG Pactual BBTG11.SA, Latin America's largest independent investment bank, had 40 billion reais ($11 billion) in cash as of the end of September and about 15 billion reais in liabilities maturing by year-end.

In addition to Cerberus, other firms that have shown interest in Recovery, Latin America’s largest debt collector, include U.S.-based Lone Star Funds and a local distressed debt fund, sources said.

The Recovery stake could fetch up to 1.7 billion reais, depending on whether the sale includes a platform for pricing loans. A second source involved in the Recovery transaction said Cerberus could be a strong candidate for the asset.

Cerberus, which oversees about $25 billion in investments, could also participate in a plan devised by BTG Pactual last year to merge Oi OIBR4.SA with rival TIM Participações SA TIMP3.SA, the source said.


The tie-up with TIM, controlled by Telecom Italia TLIT.MI, would create the Brazil's No. 1 fixed-line, wireless and data carrier.

Besides being one of Oi’s biggest shareholders, BTG Pactual is advising the company on its options, including talks with Russian billionaire Mikhail Fridman’s Letter One Investments. Letter One has pledged to invest $4 billion into Oi should the TIM tie-up materialize.

Press officials for Cerberus declined to comment.

BTG Pactual plans to exit holdings other than banking, new Chairman Persio Arida told Reuters late on Wednesday. Since its creation in late 2008, BTG Pactual has invested some 30 billion reais in industries ranging from energy and infrastructure to retailing.

As part of the strategy to dispose of non-core assets, a firm linked to BTG Pactual raised 174 million reais from an auction on shares in Brazilian real estate investment trust BTG Pactual Corporate Office Fund BRCR11.SA on the São Paulo Stock Exchange late on Thursday, traders said.

The jailed Esteves stepped down from his role as chairman and chief executive officer of BTG Pactual on Sunday.

Founding partners took control of the bank on Wednesday in an attempt to distance it from the most sweeping corruption investigation in Brazil’s history.

On Thursday, Brazil’s securities industry watchdog said it had opened a probe into how Esteves pulled out of the holding company controlling BTG Pactual and whether the transaction constituted a change of control.

The watchdog, known as CVM, will focus on determining whether the partners should be obliged to buy out minority shareholders, a spokeswoman told Reuters on Thursday.

Units in BTG Pactual’s banking and buyout divisions, a blend of voting and non-voting shares, rose for the first in six sessions, adding 1.0 percent to 20.19 reais. The stock, which has shed 32 percent since Esteves’ arrest, posted the smallest gains among Brazil’s listed financial companies, which as a group rallied 5.5 percent.

Newspaper O Estado de S. Paulo said on Thursday that Esteves’ arrest might have slowed talks between BTG and Letter One, although an unnamed source at Oi told the newspaper that it did not. Oi did not have an immediate comment on the report.

($1 = 3.7861 Brazilian reais)

Additional reporting by Paula Arend Laier and Aluísio Alves in São Paulo; Editing by Christian Plumb and Alan Crosby