‘Go back to where he never was’: Founder of Brazil’s BTG Pactual returns to fold

Andre Esteves, a self-made billionaire in his 40s and the face of an organization once described as the “Goldman of the Tropics”, was at one time a marvel of Latin American money.

Then the Brazilian fell victim to a dramatic fall. Arrested on charges of involvement in a wide-ranging political corruption scandal, he resigned as chairman and chief executive of the investment bank he founded in November 2015, leaving it in turmoil.

Nearly four years after his name was removed, Steves is back on the board of BTG Pactual. He, as the short form of the company is well known for its spelling, is now officially ‘Back to the Game’.

Shareholders approved him as chairman of the $ 22 billion-valued group at the end of April. On paper, it was the culmination of a long journey by one of Brazil’s highest-profile business figures to regain his commanding position.

But in reality, according to several people familiar with the business, the height has only given an official rank that was already the real situation.

Prior to the appointment, Steve’s name did not appear in the corporate presentation, along with BTG’s chief executive. Yet Avenida Faria Lima, north of S সাo Paulo on Wall Street, the 53-year-old’s constant height and influence in the BTG is an open secret and no longer a recognized fact.

“Andre is back where he never was,” said a former colleague, who declined to be named. “He was always incredibly present. The post of chairman is irrelevant. ”

Esteves declined an interview request.

As the sole sole proprietor of BTG’s equity, indirectly controlling approximately 25 percent of the shares, Steve assumes the status of “controlling person”, giving an insider the right to enter his office and participate in its activities. Even if only symbolically, his return captures an enthusiastic mood in an investment bank that calls itself the largest in Latin America.

The share price of BTG has surpassed the local stock index by 20 percent so far in 2022, which has increased more than five times in the last five years. The company posted quarterly earnings of R $ 4.35bn ($ 840mn) and net income of R $ 1.94bn last week – both at all-time highs.

In addition to debt and equity markets, consolidation and acquisition and trading, BTG is active in corporate debt and asset and asset management. It also runs a retail investment platform.

Financial technology start-ups like Nubank in an area where millions of people are missing out on mainstream lenders, BTG is now giving a major push to consumer banking, where Esteves is playing a strategic role.

UBS analyst Thiago Batista said BTG’s business model has undergone a “transformation” over the past few years into a “complete bank with all services”. “Their P&L is becoming more stable now than in the past,” he added. “Latin American banks have been very successful in this diversification of business while maintaining their profitability in the first tier.”

BTG’s partners hold about 70 percent of its stock. The inner culture, which past and present employees say emphasizes intellectualism and entrepreneurship, is built on Steve’s mold.

“He really gave a bank face and soul [with] It’s a very aggressive goal, “said Claudia Yoshinaga, an assistant professor of finance at the Fandacao Getulio Vargas School of Business Administration. “He is an iconic figure.”

Raised by his mother, a professor at his university in Rio de Janeiro, Steve graduated in mathematics and computing. He began his career as an intern in the IT department at Banco Pactual at the age of 21, forming partnerships within four years.

People who know Steves describe him as smart, driven, hardworking and charismatic. “He has a very deep technical knowledge. He is an mathematician with an analytical mind, but at the same time very commercial and a good salesman, “said Marcelo Mesquita, who worked with Steves for three years.

Mesquita, founder of asset manager LeBlanc Equities, added, “He knows in detail what is happening at the bank.” “Ultimately, he owns and runs things.”

At Pacquiao, Steves gained expertise as a businessman and was part of a group of young partners who ousted the founder in 1999 to take control of the firm. When Brazil emerged on the world stage as one of the so-called BRIC economies in the first decade of the 21st century, Pacquiao bought এস 2.6 billion from UBS in 2006, which gave Steves a fortune.

He left Swiss Bank two years later to set up investment group BTG with a former partner and others. In the aftermath of the global financial crisis, Steve jumped on the bandwagon to buy back his old clothes at a slightly lower price than they were originally sold.

Petrobras had a deal with the merged BTG Pactual, at the center of a massive anti-corruption campaign to produce state-controlled oil that rocked Brazil under the name Lava Jato or “Car Wash.”

Detained on suspicion of obstructing the investigation, Steves spent three weeks in the infamous Bangu prison in Rio before being placed under house arrest.

Although BTG was not under investigation, its share price fell by almost one-third in one day. As investors withdraw money from the fund, lenders sell assets from a deposit guarantee fund, fire jobs, and tap emergency funds.

Once released from domestic captivity in April 2016, Steve returned to the bank as a senior partner and advisor. The charges were later dropped and a judge acquitted him. Related to the bank’s acquisition of a stake in the African oil field from Petrobras, a police raid on Esteves’ home and BTG’s office in 2019 did not go ahead.

Late last year, Steves formally rejoined a regulatory group of partners following a series of regulatory approvals.

Retail banking will offer big tests next to its Midas touch. But competition in the sector is fierce and the five traditional lenders that dominate the Brazilian High Street are modernizing. Meanwhile, analysts say double-digit interest rates from the country’s central bank on investment platforms could dampen the flow of net new money, and analysts say the prospect of a polarized presidential election in October could upset investors.

Additional report by Carolina Ingiza

Video: Explanation of Brazil’s ‘Car Wash’ corruption scandal

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