SAO PAULO, July 10 (Reuters) - Brazil’s Grupo BTG Pactual SA plans to buy reinsurer Ariel Re Holdings Ltd for an undisclosed sum as the largest independent investment bank in Latin America expands into property and casualty reinsurance to gain a foothold in a thriving industry.
The transaction, which includes all of Ariel Re’s operating entities, assets and debt, remains subject to regulatory approval in Brazil as well as in the United Kingdom and Bermuda, BTG Pactual said in a statement on Thursday.
According to the statement, Ariel Re will become the “cornerstone of BTG Pactual’s international reinsurance venture, which builds on the success of its London-based reinsurance principal investment business” as it bolsters its presence in the sector.
Under the deal, Ariel Re will keep running its Lloyd’s of London syndicate and have access to its security ratings.
The move underscores BTG Pactual’s efforts to broaden potential revenue and business opportunities sources as financial markets in Brazil, the bank’s home turf, struggle after three years of subpar growth. BTG Pactual is expanding into commodities sales and trading and other areas such as insurance to take advantage of tougher capital and risk management rules in the Unites States and Europe.
“While current market conditions are clearly challenging, the opportunity to buy a best-in-class business with proven risk-discipline was too good to miss, as it offers an exceptional opportunity to expand our presence in the property and casualty industry outside of our local market,” Chief Executive Officer André Esteves, who is also BTG Pactual’s largest shareholder, was quoted in the statement as saying.
Units of BTG Pactual, a blend of the bank’s common and preferred stock in its investment banking and private equity units, fell 1.2 percent to 33.83 reais on Thursday. The stock is up 12 percent in the past three months.
Ariel Re is fully owned by Global Atlantic Financial Group Ltd, a multi-line insurance and reinsurance company with more than $30 billion in assets and was founded by Goldman Sachs Group Inc in 2003. It became an independent entity last year. (Editing by Lisa Von Ahn)