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BTG Said to Target $1.5 Billion for Brazil Private-Equity Fund

14 August 2013

(Bloomberg) Grupo BTG Pactual (BBTG11), the investment bank controlled by billionaire Andre Esteves, is seeking $1.5 billion (3.47 billion reais) for its next private-equity fund that will purchase stakes in Brazilian companies, according to two people familiar with the matter.

BTG Pactual Brazil Investment Fund II is seeking almost as much as the $1.6 billion gathered by the firm’s debut Brazilian private-equity fund in 2011. Half of the $1.5 billion will come from the bank, partners and employees, according to another person briefed on the matter who asked not to be identified because the fund is private.

The new fund would be one of the largest pools of capital focused on the asset class in Brazil. JPMorgan Chase & Co.’s Gavea Investimentos Ltda. also plans to target $1.5 billion for its next fund that will buy stakes in Brazilian companies, two people familiar with that firm said in June.

BTG, based in Sao Paulo, is entering a challenging capital-raising market, as commitments raised by Brazil-focused private-equity funds fell 35 percent to $758 million in the first half from the same period in 2012, according to data from the Emerging Markets Private Equity Association.

Leandro Buarque, a spokesman for BTG, declined to comment on the fundraising plans.

Lower Forecasts: BTG’s private-equity arm seeks to buy companies that have growth potential in an expanding economy. Brazil has experienced higher inflation and slower growth in recent years, expanding by 0.9 percent in 2012, down from 2.7 percent in 2011 and 7.5 percent in 2010. Economists covering Brazil cut their growth forecasts for 2013 and 2014 to 2.21 and 2.5 percent, respectively, according to an Aug. 9 central bank survey of about 100 analysts published this week.

The investment bank is cutting bonuses as revenue falls amid the slowest market for mergers and acquisitions in six years. BTG’s revenue declined 17 percent in the first half to 2.7 billion reais ($1.17 billion).

The firm’s first fund, BTG Pactual Brazil Investment Fund I, included $200 million from partners and employees and $500 million from Banco BTG.

Investments include furniture and clothing retailer Leader Participacoes SA; CCRR, a maker of adhesives, labels and specialty paper; drugstore chain Brazil Pharma SA; and physical-fitness chain Bodytech.