BTG Pactual Is Said to Shake Up Partnership as Chairman Leaves

(Bloomberg) -- A new generation is taking over Banco BTG Pactual SA as Andre Esteves, the firm’s charismatic founder, awaits acquittal in a corruption scandal.

Esteves will rejoin the investment bank’s controlling group once he’s cleared, while Chairman Marcelo Kalim gradually sells his BTG holdings to start his own company, according to three people with direct knowledge of the matter. Other leaders including Chief Executive Officer Roberto Sallouti will boost their ownership stakes and influence in the shakeup, the people said, asking not to be identified discussing non-public information. Kalim is one of the three biggest BTG partners and also one of the two largest on the controlling group.

Other partners increasing their stakes and influence include Joao Dantas, the chief financial officer; Rogerio Pessoa, head of wealth management; Renato Santos, who runs treasury and credit; Alexandre Camara, head of special situations; and Allan Hadid, chief operating officer for global asset management, the people said.

BTG declined to comment on partnership changes.

To survive the crisis after Esteves’s arrest, seven partners including Sallouti and Kalim used a share swap to take control of BTG in December 2015. They granted Esteves non-voting stock for part of his voting shares, leaving him as the biggest shareholder with a stake of about 30 percent but out of the controlling group. Sallouti and Kalim are the largest holders after Esteves and the two largest in the controlling group.

BTG’s bonds have recovered all of the value lost in the wake of Esteves’s arrest in November 2015, and the billionaire is on the brink of redemption after the prosecutor’s office said in September that there’s “no sufficient proof” against him in the corruption probe and he should be acquitted by the federal court.

Book Value

Executives who want to exit the partnership have an opportunity to avoid losses now that BTG shares have climbed about 20 percent this year to about 1.1 times book value, the price they paid for their stakes.

Kalim is leaving BTG to create his own bank, the people said, adding that he will gradually sell shares and eventually give up the chairman post. BTG, the biggest merger adviser in Brazil last year, may support his new initiative with credit and technology, according to the people.

After Esteves’s arrest, BTG unloaded more than $3.5 billion in assets and slashed jobs in offices in New York, London and across Latin America, reducing its payroll in Brazil by more than 20 percent. As the scandal faded, top partners including former Chairman Persio Arida left the bank and sold their shares in many partnership changes. Of the top seven partners controlling the bank since 2015, five remain including Santos.

Public Face

Esteves was charged with participating in a scheme to tamper with testimony of a former Petroleo Brasileiro SA executive. He always denied wrongdoing, was released soon after his arrest and is now a BTG senior partner. BTG was wrong to rely too much on Esteves as the bank’s public face, Sallouti said at an industry conference in Sao Paulo in November, adding that now he and other senior partners will take turns under the spotlight. Esteves won’t retake his former chairman or CEO titles when acquitted, Sallouti said.

“Our goal is that BTG becomes a sort of faceless institution, controlled by a group of people who give their clients a high-value service,” Sallouti said.

Esteves made a splash a decade ago -- and became Brazil’s youngest self-made billionaire -- by selling Pactual to UBS Group AG for $2.6 billion. He and several partners bought it back three years later and started an expansion. BTG went public in 2012 and snapped up businesses including the Swiss private-banking unit of Assicurazioni Generali SpA, BSI, which was sold in 2016 to EFG.

--With assistance from Ambereen Choudhury and David Scheer

To contact the reporters on this story: Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net, Vivianne Rodrigues in New York at vrodrigues3@bloomberg.net, Felipe Marques in Sao Paulo at fmarques10@bloomberg.net.

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steve Dickson, Dan Reichl

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