UBS Is in Talks to Buy Brazil’s Biggest Asset Manager

(Bloomberg) -- UBS Group AG is in discussions to buy a controlling stake in BB DTVM, competing with Franklin Templeton and BlackRock Inc. as a potential acquirer of Brazil’s biggest asset-management company, according to people familiar with the matter.

Talks for the company, which has 1.2 trillion reais ($217 billion) in assets under management, are preliminary and no agreement has been reached, the people said, asking not to be named because the negotiations are private.

The sale process will probably be delayed because state-owned Banco do Brasil SA, the company’s parent, is in the process of replacing its chief executive officer, the people said. Fausto de Andrade Ribeiro was nominated to take over for Andre Brandao, who had made the sale a priority. But Brandao quit last week after clashing with Brazilian President Jair Bolsonaro over austerity measures.

Investors are now questioning if Ribeiro, who’s been working at Banco do Brasil for more than 20 years, will continue Brandao’s asset-sale agenda.

The CEO swap “could create uncertainty around the bank’s strategy to deliver efficiency improvements,” Goldman Sachs Group Inc. analysts led by Tito Labarta wrote in a note to clients last week.

UBS, Franklin Templeton and BlackRock declined to comment, as did Banco do Brasil.

Rothschild & Co. is advising Banco do Brasil on a potential deal, which would give the buyer control over BB DTVM, according to the people, who said several different deal structures are being considered. The fund-management business generated more than 6.85 billion reais in revenue last year for Brasilia-based Banco do Brasil, up 7.2% from 2019. Rothschild declined to comment.

CEO’s Strategy

UBS already has a joint venture with Banco do Brasil for investment banking in South America and brokerage business in Brazil, as well as a commercial agreement with Banco Patagonia SA in Argentina.

Unloading a piece of the asset-management business is part of a larger effort by Banco do Brasil to reach profitability levels similar to what non-state-owned banks regularly post in Brazil. The plan involves selling assets, moving away from riskier loans and closing branches.

But that landed the company in Bolsonaro’s crosshairs. The president bashed an initiative announced by the former CEO to shutter some 200 branches and eliminate more than 5,000 employees.

Banco do Brasil’s shares have dropped almost 27% in dollar terms this year, while UBS’s stock rose 14%.

Ribeiro, who holds a post-graduate degree in economics from George Washington University, joined Banco do Brasil in 1988, and has been responsible for businesses including third-party channels and the operations in Spain and Morocco.

“Fausto de Andrade Ribeiro is a qualified candidate given his solid track record inside the bank,” Citigroup Inc. analysts led by Jorg Friedemann wrote in a report. “Nevertheless, the news reflects poorly on Banco do Brasil, although already expected, as it demonstrates a clear political interference.”

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