(Bloomberg) -- Banco BTG Pactual SA, Latin America’s biggest independent investment bank, is planning to enter the US syndicated loan market after agreeing in June to buy a New York-based lender.
“The US is the biggest credit market in the world and we need to be there,” Rogerio Stallone, a BTG partner in charge of corporate lending, said in an interview. Syndicated loans are a good entry spot because they allow the bank to “participate on the deal flow that other banks bring to us and start to better understand the peculiarities of the region.”
With a loan portfolio of about 195 billion reais ($34.8 billion), Sao Paulo-based BTG started in the syndicated loan business about two years ago by hiring the veteran Ernesto Meyer, who had previously been with BNP Paribas SA. Since then it has handled 11 transactions totaling $2.5 billion, taking midsize Latin American companies to market and attracting new lenders to the region.
Among the more unusual transactions was a loan that included a tranche denominated in renminbi. BTG also started to trade loans on the secondary market — a rarity for Brazilian banks.
“We want to keep growing our loan book in a more diversified way, reaching more companies, more geographies and offering new products,” Stallone said.
BTG said in June that it signed a definitive agreement to acquire New York-based M.Y. Safra Bank. The lender, which has no ties to J. Safra Group, had a loan portfolio at the end of March totaling $275 million. The acquisition is expected to help lower the cost of funding in the US, similar to the impact of BTG’s takeover of FIS Privatbank in Luxembourg last year. That deal lowered the firm’s cost of funding in euros by 30%, according to Meyer.
“We expect the same effect in the US, something that will allow us to reach a broader range of clients there,” said Meyer, who is now BTG’s global head of loan syndication and sales. With more than 20 years of experience and stints at JPMorgan Chase & Co., Deutsche Bank AG and BNP, Meyer is also responsible for acquisition finance, project finance, leverage finance, trade finance and asset-based lending.
Meyer said he came to BTG “to start to disrupt” the group of banks that are leaders in global syndicated markets.
Among BTG’s noteworthy deals this year was a $510 million transaction for Brazilian pulp and paper producer Bracell, which included tranches in renminbi, reais and dollars. Two newcomers to the region participated: Taiwan’s Bank SinoPac and Taishin International Bank.
Brazilian companies still represent 75% of BTG’s total loan portfolio, with 5% from Europe and the rest from other Latin American nations. The bank also handled about 1 billion euros ($1.1 billion) of transactions on European secondary markets over the past 90 days. BTG has outlets in Madrid, Lisbon, London and Riyadh as well as a broker-dealer in the US and wealth-management businesses in cities including Miami. In Latin America, the company has a bank in Chile and Colombia and a local presence in Argentina, Mexico and Peru.
In Europe, the bank was a joint book runner on a 640 million-euro loan to Aleatica SA, which was completed with a tranche in Chile equivalent to 60 million euros. And BTG just launched a 750 million-real deal for Addiante, a joint venture between Brazilian steelmaker Gerdau SA and Randoncorp, which produces trailers, trucks and railway wagons.
In Colombia, it was the lead bank on a $50 million refinancing for Parque Arauco, while in Brazil it handled all of underwriting on a 500 million-real deal for hamburger chain Madero Restaurante SA, which ended up oversubscribed. BTG just launched a 170 million-real loan for Bacio di Latte Gelato Puro, an ice-cream chain in Brazil.
“We have been successfully introducing many transactions from midcap, upper midcap companies, since many foreign banks are trying to work with companies with a bit more credit risk, although some still face internal resistance,” Meyer said.
(Corrects name of Randoncorp in 11th paragraph.)
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