UPDATE 3-BTG Pactual spins off thriving commodities arm to bolster capital

viernes 8 de abril de 2016 18:48 GYT

(Recasts to add decision, details throughout)

By Guillermo Parra-Bernal and Sarah McFarlane

SAO PAULO/LONDON, April 8 (Reuters) - Grupo BTG Pactual SA has spun off a fast-growing commodities sales and trading unit, allowing the Brazilian investment bank to free up capital in the wake of a recent balance sheet downsizing.

In a securities filing published on Friday, BTG Pactual said the move will give shareholders of the São Paulo-based ownership of 65 percent of the unit, which will be renamed Engelhart Commodities Trading Partners. The transaction, which vales the business at $1.6 billion, is expected to be concluded by September, the filing said.

Bloomberg News reported earlier Friday that the unit would be separated in a deal valuing the business at about $1.6 billion. A source with direct knowledge of the situation had told Reuters that an announcement was due on Friday.

According to the same source, management at BTG Pactual was still deciding on a formula for compensation, equity and executive retention for the unit's top managers and traders. The unit was led by Brazil-born trader Ricardo Leiman, also a former chief executive officer of Noble Group Ltd.

The deal helps insulate the fast-growing unit from the capital and reputation-linked impact of a scandal that hurt BTG Pactual last year. Founder André Esteves was arrested in November in connection with a corruption probe in Brazil, sparking massive client fund withdrawals and asset sales.

An independent probe found no sign of illicit practices by Esteves, the bank or any employee, in relation to the so-called "Operation Car Wash" that led to the billionaire financier's arrest. Esteves remains on house arrest in his São Paulo home.