‘Back to where he never left’: Brazil’s BTG Pactual founder makes a folding comeback

A self-made billionaire in his 40s and the face of what was once called the “Golden Man of the Tropics,” André Esteves was at one time the celebrity of Latin American finance.

After that, the Brazilian player declined miserably. Arrested for his involvement in a political corruption scandal, in November 2015, he stepped down as chairman and chief executive officer of the investment bank he founded, plunging the bank into turmoil. .

Nearly 4 years after her name was removed, Esteves is back on the board of BTG Pactual. He is, as the company’s famous acronym stands, now officially ‘back in the game’.

Shareholders approved him as chairman of the $22 billion conglomerate at the end of April. In theory, this is the final step in a long journey by one of Brazil’s top business figures to regain his commanding position.

But in reality, the upgrade only gives an official ranking of what actually happened, according to several people familiar with the business.

Prior to the new appointment, Esteves’ name did not appear alongside key BTG executives in company presentations. However, according to Avenida Faria Lima, São Paulo’s answer to Wall Street, the 53-year-old’s continued stature and influence in BTG is no longer an open secret and more of an admitted fact. receive.

“André is back where he never left,” said a former colleague, who requested anonymity. “He was always amazingly present. The title of president is irrelevant”.

Esteves declined an interview request.

As the single largest owner of BTG, indirectly controlling about 25% of the shares, Esteves holds a “manager” status, granting access to the office and participation in the company’s activities. , according to an insider. Even if only symbolic, his return has been in the mood for elation at an investment bank that claims to be the largest in Latin America.

BTG’s share price has outperformed the domestic stock index with a 21% gain so far in 2022, up more than five times over the past five years. Last week, the company posted quarterly revenue of R$4.35 billion ($840 million) and net income of R$1.94 billion — both all-time highs.

Besides debt and equity markets, mergers and acquisitions, BTG is also active in corporate lending and asset and asset management. It also runs a retail investment platform.

As a fintech startup such as Nubank Booming in a region where millions are already underserved by mainstream lenders, BTG is now making a big push into consumer banking, with Esteves playing a strategic role.

UBS analyst Thiago Batista said BTG’s business model has undergone a “transformation” over the past few years towards “a complete bank with all services”. “Their P&L tends to be more stable now than in the past,” he added. “They have been very successful in diversifying this business, while maintaining their profitability among Latin American tier one banks.”

BTG’s partners hold about 70% of the company’s shares. The internal culture, which past and present employees say emphasizes meritocracy and entrepreneurialism, is shaped by Esteves’ pattern.

“He really gave face and spirit to a bank [with] Claudia Yoshinaga, assistant professor of finance at the Fundação Getúlio Vargas School of Business Administration. “He’s an iconic character.”

Raised by her mother, a university professor in Rio de Janeiro, Esteves graduated with a degree in math and computers. He started his career at the age of 21 as an intern in the IT department of Banco Pactual, becoming a partner within 4 years.

Those who know Esteves describe him as intelligent, active, hardworking and charismatic. “He has very deep technical knowledge. He was a mathematician with an analytical mind, but at the same time very commercial and a good salesman,” said Marcelo Mesquita, who worked with Esteves for three years.

“He knew everything that was going on in the bank down to the last detail,” said Mesquita, founder of asset management firm Leblon Equities. “In the end, he’s the owner and runs everything.”

At Pactual, Esteves excelled as an entrepreneur and was among a group of young partners who in 1999 overthrew the founder to take control of the company. As Brazil rose to the global stage in the first decade of the 21st century as one of the so-called Bric economies, Pactual was purchased by UBS for $2.6 billion in 2006, bringing left Esteves a fortune.

Two years later, he left the Swiss bank to form the BTG investment group with official partners and others. In the aftermath of the global financial crisis, Esteves splurged on her old outfit for a little less than its original price.

The consolidated BTG Pactual has deals with Petrobras, the state-controlled oil producer at the center of the massive anti-oil operation that has rocked Brazil known as Lava Jato, or “Car Wash.” .

Detained on suspicion of obstructing the investigation, Esteves spent three weeks in Rio’s notorious Bangu prison before being transferred to house arrest.

Although BTG was not investigated, its share price fell by about a third in just one day. When investors pulled money out of the fund, lenders resorted to selling assets, evicting jobs, and tapping emergency funding from the deposit guarantee fund.

After being released from domestic custody in April 2016, Esteves returned to the bank as a partner and senior advisor. The charges were later dropped and he was acquitted by a judge. Police raids on Esteves’ home and BTG offices in 2019, in connection with the bank’s acquisition of shares in oil fields in Africa from Petrobras, did not go further.

At the end of last year, Esteves officially rejoined the group of controlling partners following a series of regulatory approvals.

The retail bank is launching the next big test of its Midas touch. However, competition in the sector is stiff and the five traditional lenders that dominate the streets of Brazil are modernizing. Meanwhile, double-digit interest rates from the country’s central bank could dampen new net inflows into investment platforms like BTG, analysts say, and the prospect of a polarizing presidential election in October could wobble investors.

Additional reporting by Carolina Ingizza

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