Banco BTG Pactual S.A. is today an investment banking powerhouse in Latin America. The firm was founded in Rio de Janeiro, Brazil as Pactual DTVM in 1983 by a trio of Brazilian partners led by Paulo Guedes, a former Minister of Economy under the administration of Jair Bolsonaro and a Master of Arts and Ph.D. alumnus in Economics from the University of Chicago. Initially engaged in research as well as sales and trading including proprietary operations only, a management buyout took place in 1998 when a team of partners took over the establishment including André Esteves, Eduardo Plass, Marcelo Serfaty and Gilberto Sayão.
In the early 2000s, the investment boutique expanded throughout Brazil including the opening of a branch office in the Cayman Islands and incursion in asset management becoming a full-service investment bank after buying Banco Bamerindus S.A., another Brazilian investment firm. Moreover, in 2006, the Swiss financial giant known as UBS Group A.G. purchased Banco Pactual S.A. for $ 2.5 billion becoming UBS Pactual S.A. Soon after, a group of former insiders led by André Esteves and including Pérsio Arida, an economist trained at MIT and former President of the Brazilian Central Bank under the administration of Fernando Henrique Cardoso, created BTG Investments S.A. The latter then bought UBS Pactual S.A. in 2009 becoming Banco BTG Pactual S.A. The following year, BTG Pactual acquired control of a local competitor and carried out a private placement raising $ 1.8 billion of capital representing the ownership of 18% of the firm from international investors.
In 2012, on the other hand, the firm went public on the B3 raising $ 1.96 billion of proceeds with an IPO that was oversubscribed becoming one the 20 most valuable companies trading on the Brazilian stock exchange then. Likewise, the firm bought the biggest investment bank in Chile known as Celfin Capital S.A, a transaction that amounted to $ 600 million while bringing on board as partners fifteen Chileans who joined the top brass of the firm. Similarly, in the same year, BTG Pactual acquired the third biggest broker-dealer in Colombia known as Bolsa y Renta S.A. for $ 100 million while bringing on board five Colombians who joined in the same fashion the upper echelon of the now expanding investment banking titan. Altogether, BTG Pactual is nowadays an enormous investment bank in Latin America with Brazilian roots becoming in the process the most valuable listed company regionwide after reaching a staggering market value of around $ 90 billion while netting over $ 800 million in profits in its last fiscal year alone carefully discounting awesome prospects ahead, both in the short run and long term.
Currently, the firm is controlled by eight Brazilian partners including the newly minted billionaire Chairman of the entity André Esteves along with the CEO of the investment house Roberto Sallout, Nelson Jobim, John Huw Gwili Jenkins, Cláudio Eugênio Stiller Galeazzi, Mark Clifford Maletz, Eduardo Henrique de Mello Motta Loyo and Guilhermo Ortiz Martínez. This group along with the fifteen Chileans and five Colombians from the two acquisitions made in 2012 collectively control the stock, thus aligning in turn the interests of the firm and its controlling shareholders who are themselves insiders of the growing investment banking juggernaut. Overall, over 300 partners at the firm between managing directors, managing partners and associate partners own at least 70% of the stock.
Furthermore, André Esteves was implicated in the “Operation Car Wash” corruption scandal that shook Brazil in 2014. As a result, he was detained in 2015 spending three weeks in jail and several months of house arrest having had to relinquish his board seat and operational management role at BTG Pactual. Nevertheless, having gone through litigation in courts, he was acquitted of any wrongdoing in 2018. In fact, the Brazilian justice system had to issue a formal apology to members of the firm stating that it was a judicial error because the whole legal case against him was proven to be without merit and as a consequence all remaining charges were dropped after the first acquittal. Soon after, André Esteves came back regaining his board seat, management duties and invigorated from the entire experience to catch up fast at the firm. His shareholding, on the other hand, was intact after having been placed in a blind trust during the whole affair.
Moreover, a clash of prominent insiders at the firm took place right after the acquittal of André Esteves when Marcelo Kalim, the number two in command at BTG Pactual then, disagreed with André Esteves, the number one in command, over business strategy regarding expansion at the firm. Accordingly, Marcelo Kalim wanted to launch a full-fledged digital commercial bank whereas André Esteves wanted to create a digital broker only catering to current and prospective clients at the firm. The board sided with André Esteves and consequently, Marcelo Kalim had to depart amicably. However, BTG Pactual today has a license to handle commercial banking activities in some of the countries where it operates in Latin America including Brazil and Colombia. By the same token, Marcelo Kalim founded thereafter a digital commercial retail bank known as Banco C6 S.A. that happens to be the second biggest operation of its kind in Brazil after Nubank, being his sole accomplishment in the process and placing him right there at the top after being a near billionaire today having been ranked as a billionaire before just recently according to Forbes.
To conclude, BTG Pactual is a tremendous titan of investment banking in the region. The firm maintains leadership in the whole spectrum of services industrywide, from IPO underwritings and bond offerings to research, sales and trading, corporate lending, proprietary operations, prime brokerage, M&A advising, restructuring advising, trust services, custodial services, wealth management and asset management. In the asset management arena alone, for instance, the firm is the third biggest player regionwide after XP Corporation and Banco Itaú Unibanco S.A. currently managing a cool $ 177 billion of assets under management or AUM as of the fourth quarter in 2022. Similarly, BTG Pactual is the biggest owner of timberland in Latin America and among the largest across the entire hemisphere after grouping landholdings in several continents. Altogether, André Esteves has steered the growth and success of this expanding investment banking heavyweight with quite a great deal of precision, cleverness and efficiency presently catapulting the firm among the top of business giants in Latin America. In addition, the degree of wealth creation in just over a couple of decades of hard work at the firm is unmatched. In fact, tens of partners have attained a level of wealth unimaginable to them in the past after commanding sizable fortunes of several hundred million dollars. This is a total success story in Latin America with promising prospects materializing for sure in the yet future ahead.