The investment banking industry in Brazil is intensely competitive and comprised of Brazilian and international banks, financial institutions and advisory boutiques. These entities provide a wide range of services, including underwriting and placement services in capital raising transactions through public and private equity markets, M&A and advisory services, as well as other financial and structured products and services for corporations, financial institutions, investment funds, governments and individuals.
Equity Capital Markets
Companies access capital markets for a variety of reasons, including to strengthen their balance sheets, financing their growth strategies and optimizing their capital structure, mainly through a primary offering. In addition, a shareholder or a group of shareholders may, for different reasons, request or require the sale of a shareholding interest in the company; in this case, the company would conduct a secondary offering. For example, many private equity funds use secondary offerings as an exit strategy to sell their initial investments in a company.
Debt Capital Markets
In order to achieve more favorable capital structure and financial business activities, Brazilian and Latin American companies (as well as government entities), issue fixed income securities (debt) and several debt instruments.
M&A and Advisory
Services related to mergers and acquisitions, divestitures, restructurings, spin-offs and judicial recoveries. M&A and consulting services are usually provided by investment banks, consulting and financial advisory firms, law firms and other financial institutions.
Sales and Trading
Sales and trading is a large and diversified industry segment consisting of a variety of customer-driven market-making and trading activities. The primary products of sales and trading include market-making, brokerage and clearing services, and derivatives, interest rate, foreign exchange, equities and energy transactions for hedging and trading purposes. Sales and trading includes both FICC (fixed income and currency) and equity sales and trading activities.
In Brazil, equities, futures and certain other derivatives are primarily traded on BM&FBOVESPA, while fixed income, foreign exchange and credit-linked derivatives, as well as fixed income securities and government bonds, are primarily traded on the OTC market. In the international markets, we trade most of the derivatives and debt instruments on the OTC market, while equities in the form of American Depository Receipts, or ADRs, are traded on the NYSE.
Corporate lending operations are mainly performed in Brazil and correspond to financing, structured credit products, loans and debt guarantees for companies, in order to develop solutions tailored to the business profile and objectives of each client. There are several credit products available to companies in Brazil, such as the operations listed below:
Revolving credit: short-term revolving line of credit available to companies, which provides immediate liquidity.
Working capital loans: advances on resources to meet the working capital needs of borrowers.
Accounts payable financing: provision of financing to the borrower for the purchase of a product or service.
Receivables financing: allows a company to sell its products in installments while receiving payment in one lump sum.
Discounted securities: financial institutions will make advances of amounts related to certain instruments, including duplicates and promissory notes, in order to anticipate the cash flow of companies.
Asset management usually involves the professional management of investments (stocks, debt securities, derivatives and other securities) by outsourced managers on behalf of investors to meet their specific investment objectives. Investors could be companies, institutions, governments and individuals who invest in various vehicles known as funds.
Traditional asset management usually involves management and trading of stocks, fixed income and/or derivatives portfolios. A funds investment objectives may range from total return, capital appreciation, fixed income, the tracking of an index, among other types.
Alternative asset management, in turn, uses a wide range of investment strategies to achieve targeted returns on certain pre-defined risk parameters and investment guidelines. Some examples include private equity funds, real estate funds, venture capital, hedge funds and fund funds, among other types.
The main asset management funds in Brazil include fixed income funds, money market, equity funds, multi-market funds and structured funds.
The wealth management sector provides, in general, services to High Net Worth Individuals (HNWI), including highly-customized and sophisticated wealth management services, financial planning consultancy, trust advisory services and other advisory services related to estate planning, business succession and small-scale M&A transactions, among others.
Wealth Management services include a comprehensive set of investment products for high net worth individuals, mainly by investing in a diverse range of financial assets through funds managed internally or by other financial institutions or or independent resource managers.
Other services in this segment are also related to advice on planning, loans and bank guarantees and family office, financial planning and corporate advisory.