Business Environment

Investment Banking

BTG Pactual is one of the leading investment banks in Latin America. We provide a wide range of investment banking services, including underwriting and placement of debt and equity securities in the capital markets, and financial advisory services to corporations, financial institutions, funds, governments and individuals. While these services are provided primarily to customers based in the region, we also serve non-Latin American customers, including entities and individuals seeking to participate in mergers, acquisitions and other transactions – also involving Latin American securities or other financial instruments, including services to non-Brazilian customers who wish to list their securities in local markets.

We recently increased our coverage in Latin America, mainly in Chile, Peru, Colombia and Mexico. BTG Pactual’s historical strength and our expanded local coverage have reinforced our competitive position in the region. We have also increased our market share in the DCM segment leveraged on the expansion of our distribution capacity and capillarity. As a result, the Bank has consolidated its leadership positions in all segments – both in Brazil and Latin America.

Our Investment Banking activities are divided into three categories:

Capital Markets – ECM
Companies access the capital market for several reasons, including to strengthen their balance sheets, finance their growth strategies, and optimize their capital structure, primarily through a primary offering of shares. In addition, a shareholder or group of shareholders may, for several reasons, request or demand to sell an equity stake in companies (i.e. the company would conduct a secondary offering). For example, some private equity funds use secondary offerings as an exit strategy to divest their initial investments in a company.

Capital Markets – DCM
In order to achieve a more favorable capital structure and financial business activities, Brazilian and Latin American companies, government entities also issue fixed income securities (debt) and several debt instruments.

Mergers and Acquisitions (M&A) and Financial Advisory Services
Range of services related to mergers and acquisitions, divestitures, restructurings, spin-offs and receiverships. M&A and advisory services are usually provided by investment banks, boutique advisors, financial advisory companies, law firms, and other financial institutions.

Sales & Trading

Within this business unit, we offer financial products and services to a diversified group of customers in local and international markets, including market making, brokerage services, settlement and derivatives, interest rate, foreign exchange, equities, energy and commodities, hedging and trading. These activities are divided into two segments: (i) FICC (fixed income, currency and commodities) and (ii) equity sales and trading.

The former represents a large and diversified operation, through which we engage in a range of customers-oriented commercial and market-making activities. We offer financial products and services to a broad group of organizations, financial institutions, investment and pension funds, and governments in Brazil and abroad. These products and services include market making for fixed income instruments, brokerage and settlement services, as well as derivatives, interest rate, foreign exchange and energy transactions for hedging and trading purposes.

We also offer a wide range of financial instruments, including debt securities, spot foreign exchange, swaps, options, futures, loans and non-deliverable forwards, insurance and reinsurance, among others. BTG Pactual’s willingness and ability to undertake calculated risks enabled us a significant competitive edge in this segment.

Our FICC financing activities consist of:

● Perform high volume trading with moderate spreads in large and highly liquid markets;
● Capitalize on our strong market relationships and capital position to conduct transaction in less liquid markets where spreads are generally wider; and
● Structure and execute a wide range of transactions linked to fixed income products, currencies and commodities according to our customers’ demands.

We provide brokerage, settlement and custody services for several products in the Latin American market to a diversified customer base, including hedge funds, pension funds and other institutional customers. These activities generate commissions through the execution of transactions on futures and commodities exchanges for customers in several countries.

One of FICC’s main activities is market making in a wide range of securities and financial products. We act, for example, as intermediary for the Central Bank in foreign exchange transactions and as a specialist intermediary in the distribution of government bonds for both the Central Bank and the National Treasury. We believe that the activity of market maker in a wide range of fixed income, foreign exchange and derivatives products related to our customers is crucial to maintain our relationship with customers and to support our distribution business by providing liquidity in the secondary market.

Our customers value counterparties that are active in the market and willing to provide liquidity and research-based approaches and analytical abilities. We therefore invest in proprietary research capabilities and analytical models, strengthening our ability to provide quality advice, including quantitative and qualitative analysis of global economic, currency and financial market trends, as well as credit analysis of corporate and sovereign fixed income securities.

We are active in the options and futures markets and structure, distribute and execute over the-counter (OTC) derivatives related to market indices, sector groups and individual company shares, aiming to facilitate customers’ operations and our activities on their behalf. We also develop quantitative strategies and advise on hedging and portfolio restructuring and asset allocation. We create instruments specially adapted to allow sophisticated investors to perform hedging strategies and establish or liquidate investment positions. As a result, BTG Pactual is one of the main participants in the trading and development of derivative instruments in Brazil, actively trading futures and options on the B3 – in addition to trading on most major exchanges in Latin America, the United States, Europe and Asia.

Corporate & SME Lending:

We offer financing, structured credit, loans and guarantees to companies, mainly in Brazil – and, increasingly, across Latin America with the expansion of the credit portfolio in Chile and the start of activities in Colombia. Our main focus in corporate credit is to meet the large corporations demands, developing solutions specific to the business profile and objectives of each customer, such as cash flow management and asset-liability mismatches. More recently, we also started to offer, in Brazil, financing to Small and Medium Enterprises (SMEs).

In our financing operations, we offer financing to different customer profiles, ranging from medium-sized companies to companies with larger investments – with the potential to be leaders in their respective segments, as well as to conduct public offerings in the future. Based on the significant synergies between this area and other business units, we seek to leverage our credit platform both to reinforce the relationship with corporate customers already in our portfolio and to expand the Bank’s customer base.

Our corporate credit activities are segmented into two main business lines: (i) origination and (ii) treasury products. The former focuses on identifying loan demand for Latin American companies and multinationals with Latin America coverage. Through our origination platform, we offer a wide range of credit products, including on-lending of National Bank for Economic and Social Development (BNDES) credit lines, export financing lines, working capital loans, and acquisition financing.

The latter offers a variety of treasury products to our customers, including sophisticated and innovative derivative products to help them manage market risk exposure to exchange rates and interest rates. Through our structured operations, we also offer additional products for managing risk in the commodity markets.

Thus, we provide customers with comprehensive coverage to manage their onshore and offshore cash positions according to their liquidity needs and the risk profiles of their businesses. In addition, we have expertise in structuring exclusive funds for our customers, through which we can offer additional Asset Management products.

We also seek to identify credit arbitrage in loans and acquire and capitalize non-performing loan portfolios and lawsuits via the Special Situations business within the Corporate & SME Lending unit. These arbitragesarise in several contexts, which include the turnaround of large companies.

Such transactions usually have higher yields and higher probability of default than our core corporate lending business, with their risks offset by comprehensive collateral guarantees.

Asset Management

Comprises fund management and fund administration services. While the former is focused on managing the funds’ portfolios on a discretionary basis, the latter consist of calculating the net asset value (NAV) of the funds and providing other services, such as monitoring fund compliance with applicable regulations and operational control of the assets underlying the portfolios. Our main customers in fund management are High-Net Worth Individuals and institutional customers – which include pension funds, companies, insurance companies, and financial intermediaries (third-party distribution). Diversification of our customers’ base is an essential aspect of our business strategy, which ensures we are not dependent on any particular customer.

We distribute our funds through the distribution channels of our Asset Management and Wealth Management units, as well as through banks, brokers and other financial intermediaries. Recently, since the development of our digital investment platform, we have significantly expanded our distribution capacity, reaching retail customers using our own platform, in addition to those gained through distribution agreements on other digital platforms. In addition, with the growth of independent financial advisors (IFAs) industry, we have leveraged of our products distribution in different regions and customer profiles.

Through BTG Pactual Serviços Financeiros (our fund management services company), we provide a wide range of services to our customers in relation to onshore and offshore funds, including:

  • Net asset value calculation, which is the accumulated market value of the fund’s assets net of its liabilities;
  • Asset pricing;
  • Register and transfer agent services;
  • Control of the fund’s fees (administration and performance fees) and other expenses;
  • Reports on the breakdown of the fund portfolio;
  • Development of monthly reports for the fund’s customers; and
  • Any taxes that may apply to the funds are calculated.
Wealth Management & Consumer Banking

We provide investment consulting financial planning services and offer investment products to high-net-worth individuals as well as high-income retail clients located primarily in Latin America, with customers most located in six countries: Brazil, Chile, Peru, Colombia, México and Argentina. These services are offered through separately managed accounts, as well as multi-investor vehicles in various financial asset classes – via funds managed by our Asset Management team and funds managed by other financial institutions or asset managers. We also offer other services to our wealth management customers, such as estate planning, bank loans and guarantees, and family office services.

Since 2016, our digital investment app has acted as a marketplace for investments, distributing investment funds, fixed income products and pension plans from BTG Pactual and third parties, as well as treasury investments and home broker resources to all our customers. Distribution is made through three different channels:

  •  B2C (Business to Consumer): connects the Bank directly to our end customers.
  • Business to Business (B2B) and Multi-Family Offices (MFOs): connects a network of more than 100 independent agents and their customers to the platform; and
  • BTG Advisors: offers a digital investment platform combined with personalized advisory services through a network of investment advisors.

Our wealth management model is based on personalized, proactive customers service through specialized advisors, organized by market for an approach that fosters long-term relationships. Each advisor serves a limited number of customers, offering a range of financial products and services customized to their needs, financial expectations, and risk tolerance – with periodic reviews that help our customers monitor their portfolios and adapt to changing scenarios It is up to the advisors to expand the coverage of Wealth Management products and services in our customer base, and to reach new customers throughout Latin America.

Also fundamental to the Bank’s strategy in this segment, our group of Independent Financial Advisors (IFAs) grew strongly during the year. These professionals work as financial intermediaries with BTG’s partner offices, and assist customers in identifying investment solutions that meet their needs and expectations in the most assertive manner. When they are hired by BTG Pactual, advisors undergo a training program that covers not only knowledge about products and services, but also the Bank’s policies, commitments and practices, including ESG aspects such as sustainable consumption and waste management, as well as Compliance.

To foster this network of financial intermediaries, we accelerated, in 2021, the integration processes of the portfolio consolidator Kinvo, acquired in March, in order to expand the portfolio display possibilities for the customer. Kinvo is a fintech with more than 700 thousand users, which total more than R$100 billion in registered investments, in a digital platform that allows the user to consolidate investments from different financial institutions into a single portfolio.