‘Goldman of the Tropics’ desires to assist Brazil feed the world | USAEMALL.com

The head of Brazil’s biggest investment bank reckons his country will supply 80 per cent of the extra food needed to feed the world over the next two decades — and plans to seize on the opportunity by making his company “one of the main global players” in commodities.

André Esteves, group chair of BTG Pactual, said the $26bn group, once nicknamed the “Goldman Sachs of the Tropics”, was looking to challenge global trading houses by capitalising on Brazil’s position as a leading exporter of agricultural produce.

“Brazil has a strategic importance which goes beyond its GDP or its military presence,” he told the Financial Times in his first interview in six years. “Brazil is the key provider of food security to the world.” 

The 15mn tonnes of physical commodities BTG trades a year remain far below the levels of agribusiness giants such as Cargill or Bunge. However, by combining its range of products, it is aiming to become “one of the main global players in the sector”, with a focus on the route between Latin America and Asia.

“BTG can provide for its clients a service from the farm gate to delivery to a Chinese buyer, or an Arab buyer in Abu Dhabi, or in India . . . a service which is as competitive or more than the big trading houses,” Esteves said. “I see a very big expansion happening in Asia in terms of the commodities world.”

The push is a typically daring move by Esteves, a 56-year-old former bond trader who is among the most influential business figures in Latin America’s largest economy.

Born in Rio de Janeiro, the computer science and maths graduate took BTG Pactual from its roots in dealmaking and the trading floor to become a financial conglomerate and Brazil’s sixth-largest lender with total assets of R$647bn.

Along the way, Esteves sold the firm’s predecessor Pactual to UBS for $2.6bn — about six times book value at the peak of a Brazil boom in 2006 — then bought it back for about the same amount three years later during the global financial crisis.

Today, it has grown corporate banking and digital retail arms, alongside roughly $330bn under management across its asset and wealth management divisions. 

The São Paulo-headquartered group reported an 18 per cent rise in net income to a record R$12.3bn in 2024, on revenues up 16 per cent to R$25.1bn. Return on equity — a key industry metric for profitability — was 23 per cent on an adjusted basis.

With Brazil’s high interest rates weighing on capital markets activity, corporate lending was the single biggest source of revenue last year.

“Other areas of BTG have expanded faster than the investment bank,” said Thiago Batista of UBS. “In all the last few years, we’ve seen the bottom line growing.”

BTG, whose initials spell out “Better than Goldman” in a pun favoured by some of Brazil’s financial community, remains majority-owned by its partners — vanishingly rare for a 21st century bank but something Esteves believes is “sacred” and the key to its success.

Roughly 90 partners and 300 associates own about 70 per cent of the bank, a figure that has not changed much since the bank floated a minority stake in 2012. Esteves feels this gives BTG “a very strong sense of ownership and very strong staff longevity”, with the 13 partners on the management committee averaging a tenure of 25 years each.

The model has also netted Esteves a fortune of $6.9bn thanks to his personal stake, making him Brazil’s fifth-richest person, according to Forbes.

Success has not sapped his work ethic. Known for his top-level contacts in Brasília and for working brutally long hours, travelling constantly and on occasion lunching twice a day to maximise the contacts he can entertain, Esteves all the while deploys the easy-going charm that is a trademark of his native city.

Commodities is not the only area exciting Esteves. He also wants to position BTG as the “port of entry and port of exit for Latin America”, offering global opportunities for Latin investors via bank subsidiaries in Europe and the US, and Latin American opportunities for global investors.

A core growth area for BTG is wealth management, with acquisitions playing an important part. The purchase this year of Julius Baer’s Brazilian operations took the group’s family office assets above R$100bn.

BTG also has its sights on expansion in Europe, where it obtained a banking licence through the takeover of Luxembourg’s Fis PrivatBank in 2023, as well as the US, where it is awaiting regulatory clearance for last year’s agreed takeover of MY Safra Bank.

BTG’s home market in Latin America has proved volatile this century, starting with strong growth on the back of a commodity boom then slumping back into a “lost decade” of minimal growth after the financial crisis. Esteves is convinced the region is learning from its mistakes, if more slowly than he would like, so “the next 20, 30 years will, in my view, certainly be better than the last 20 or 30”.

In Brazil, the alarm last year in society when inflation expectations rose to 5.5 per cent a year, shows a “huge institutional evolution” from the 1980s era of hyperinflation when Esteves was a teenager. “Anyone from my generation thinks 5 per cent is fine,” he said.

Along with his country’s ups and downs, Esteves has ridden a personal rollercoaster of fortune.

An only child raised by his university teacher mother and his manicurist grandmother after his father left the family, he was educated in Rio’s federal public university and worked his way up in Pactual.

But in 2015, he was arrested by prosecutors probing a huge corruption scandal at state-controlled oil group Petrobras and spent three weeks in Rio’s infamous Bangu prison — home to hired guns and drug traffickers — before negotiating house arrest. In November, that year Esteves was forced to resign as chair and chief executive of BTG but was cleared of all charges in 2018 and almost four years later returned as chair.

“He is a brilliant banker and a tireless entrepreneur, who managed to transform a proprietary trading operation into a financial conglomerate with excellence in multiple areas,” said one senior financier on Faria Lima, Brazil’s equivalent of Wall Street, who asked not to be named. However, he added: “Despite its size and diversification, BTG’s results are still highly dependent on Esteves.”

BTG has participated in talks with Brazil’s central bank and other big lenders over the future of Banco Master, according to one person aware of the situation. The smaller institution has gained attention over its rapid growth and investments in higher-risk and low-liquidity assets.

Esteves cites collegiate decision-making, hard work and a focus on the long term as the cornerstones of his management style. “The partnership forces you to share decisions,” he said, adding that BTG never took the easy decision for the short term.

“We do the opposite — we take decisions here which sacrifice the short term to facilitate the long term. The company’s performance is much more important than the individual bonus”.