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Hedge Fund Boom Lures Former Brazil Central Banker Le Grazie

Hedge Fund Boom Lures Former Brazil Central Banker Le Grazie

(Bloomberg) -- Brazil’s hedge fund craze has lured another big-name financier.

Reinaldo Le Grazie, a former director of monetary policy at Brazil’s central bank, joined an asset manager to launch a new hedge fund focused on finding the winners in the digital transformation sweeping Latin America’s biggest economy. The plan is to start the fund by the end of October, Le Grazie said in an interview.

“There are several companies fighting for digital supremacy in Brazil,” he said. “We want to be specialists in that.” Le Grazie said he’s been looking into how digitization affects businesses in the payments, banking and consumer sectors.

The fund will be called Panamby Inno -- short for innovation -- and invest about 40% of its assets in equities. It will also have a fixed-income book focused on Brazilian assets, and a so-called “back book,” which will handle hedging and keep the fund’s volatility in check, he said.

It will begin with enough capacity to manage as much as 5 billion reais ($1.2 billion), according to Le Grazie, who will head the fund’s investment committee. Pedro Mollo, a 25-year veteran of Banco Votorantim SA, will be chief investment officer.

Le Grazie’s focus on innovation is no passing fad: During his tenure at Brazil’s central bank, he was one of the architects of regulatory changes designed to foster competition and reduce rates in Brazil’s payment industry, including putting a cap on debit-card interchange rates and clearing hurdles for card acceptance.

He’s also no stranger to the asset-management industry, having spent five years at Banco Bradesco SA’s asset manager, the nation’s third biggest, including a stint as chief executive officer from 2014 to 2016.

Fund Boom

The firm Le Grazie is joining, Panamby Capital, was founded by Mollo and other partners late last year as a wealth manager and structured-fund manager. Le Grazie will be responsible for the new hedge fund expansion at the firm, which has about 30 employees, with roughly a dozen working in the hedge fund division.

Brazil’s hedge fund industry is in the midst of a boom after a fourth consecutive year of net inflows and almost 200 billion reais in new money since 2016.

“All-time low interest rates have investors hunting for assets at the same time new digital-distribution platforms have brought people to the industry that had been left out,” Le Grazie said.

He’s betting the nation’s benchmark rates, currently at a record low 5.5%, will get even lower, reaching close to 4.5% by the time the central bank finishes the cycle. The speed of cuts “should be as fast as possible, so it’s clearly stimulative,” he said, adding that the biggest risk for Brazil’s growth is the lagging private-sector investment rate. That will pick up if the government speeds asset sales to the private sector, he said.

Le Grazie is joining the ranks of government officials from Brazil’s last administration moving on to jobs in the finance industry. His previous boss, former central bank president Ilan Goldfajn, is joining Credit Suisse Group AG as chairman for Brazil, the bank announced earlier this month. Former Finance Minister Eduardo Guardia was recruited by Banco BTG Pactual SA as a partner and head of its asset-management unit, and Ana Paula Vescovi, the former treasury director, will head the macroeconomic department at Banco Santander SA’s Brazilian unit.

To contact the reporters on this story: Rachel Gamarski in in Sao Paulo at rgamarski@bloomberg.net;Felipe Marques in Sao Paulo at fmarques10@bloomberg.net;Vinícius Andrade in São Paulo at vandrade3@bloomberg.net

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

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