Santander Veterans Lead New Batch of Brazilian Hedge Funds

(Bloomberg) -- Former executives at Banco Santander SA are behind the latest crop of new hedge fund shops hoping to capitalize on Brazil’s fast-growing industry.

Greenbay Investimentos and Meraki Capital are among the new firms vying for the record flow of cash that’s poured into Brazil’s hedge funds over the past four years. They are competing in an industry with 1.5 trillion reais ($287.3 billion) in assets under management, according to data from the local capital markets association.

Greenbay just launched the Greenbay Convex fund, with an initial capacity to manage up to 4 billion reais, according to Gustavo Brotto, the former head of the proprietary-trading desk at Santander’s Brazil unit. He has put together an 11-person team, including Marcel Yagui, who also worked at Santander’s treasury unit and will focus on offshore currency markets, and Flavio Serrano, formerly Haitong’s chief economist in Brazil.

“There was concern we were arriving too late in the industry, but the level of interest in our product has been pretty high,” Brotto said in an interview.

The firm’s hedge fund will target Brazilian markets, with initial bets focusing on fixed-income plays, Brotto said. It will also start off with 10% of its portfolio managed as a long-only strategy on Brazilian stocks.

Under a low-rate environment, Brazilians have added risk in search for better returns, pouring money into more sophisticated investments. Local hedge funds saw about 104 billion reais in net inflows last year, the highest since at least 2006, according to Brazil’s capital markets association. This year, net inflows stand at 24.6 billion reais through March.

Meraki Capital is another new asset manager launched by a former Santander executive looking to take advantage of the demand for alternative investments. Roberto Reis, former head of equities at the bank’s asset-management unit in Brazil, co-founded the firm, which debuted in March and has already attracted about 1.9 billion reais in assets under management.

Meraki also has the backing of Lia Aguiar, daughter of the founder of Banco Bradesco SA, who owns 25% of the asset manager.

The Aguiar family owns around 3.8% of Bradesco, a stake currently worth about $1.4 billion. Luiz Goshima, previously head of the family office handling Lia Aguiar’s fortune, is the chief executive officer at Meraki. The firm has two equity-focused hedge funds with different levels of volatility.

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