New contender enters LatAm asset management industry

Brazilian investment banking group BTG Pactual and Chilean investment manager Celfin Capital have merged to form a new Latin American investment bank targeting asset management opportunities across the region.

BTG Pactual, which offers investment banking, asset and wealth management services, will now be active in the regions Celfin already has a footprint, namely Chile, Peru and Columbia.

The group said it would initially concentrate on these markets and Brazil, although it could expand into Argentina and Mexico at a later stage.

Argentina would take priority over Mexico and there is a “strong possibility” BTG Pactual will establish a presence there, but the country is still far less institutionalised than Chile and Peru, the company explained.

Following completion of the merger BTG Pactual will have $69bn in its asset management unit and $28bn in its wealth management division.

Latin America is considered an exciting source of new investment for both regional players and asset managers in Europe.

The Latin American asset management industry is currently estimated to be worth $1.24trn. According to a Cerulli Associates report on Latin American Distribution Dynamics, the region experienced a 23% rise in assets under management in 2010 which brought total assets above $1trn.

Banco Santander is just one European group honing in on Latin American opportunities. Five of its 10 core markets are Brazil, Mexico, Chile, Argentina and Poland which account for the majority (54%) of its profits.

Brazil alone made the biggest contribution to Santander’s earnings in 2011, representing €2.61bn of profits (28% of the total).

André Esteves, chief executive of BTG Pactual, said everytime European groups cut back their Latin America operations, his bank is presented with an opportunity. However, he has has not witnessed Latin American firesales from European banks yet and says such opportunities will depend on “how deep and how expensive the eurozone challenge is.”

Esteves said the flow of investment in Latin America is increasing strongly and capital markets are developing at a fast pace in Colombia and Peru. He added that more mature markets, such as Brazil and Chile, have high growth rates.

“We want to be a reference for corporations, institutional investors and high net worth individuals with interest or business in Latin America”, Esteves declared.

He described the new group as a “powerhouse” of asset management and private banking expertise, set to capitalise on the changing face of the global financial system.

In Latin America there will be “a few big banks with global reach competing with a few regional powerhouses. We will be one of them, owing to our scale, capital, talent and commitment,” Esteves said.

He is hopeful that by improving the investment banking, asset management and wealth management culture in Latin America, capital markets across the region will also develop.

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