A trio of domestic firms dominates sales in Brazil — but one continues to have the edge, according to Institutional Investor’s annual All-Brazil Sales Team.
For the third year in a row, no one could wrest the crown from BTG Pactual. In addition to placing No. 1, the domestic firm topped each of the six attributes that more than 240 buy-side money managers at 192 firms were asked to consider when ranking the top sales teams.
These included the BTG Pactual team’s ability to add value to research and generate ideas. The firm also earned plaudits for its ability to provide not only market knowledge but a global context to sales in Brazil.
Never was this more important than during a year consumed by the Covid-19 pandemic, which gripped not only the country but the world. “Unique should be the word to describe the year of 2020, in all aspects,” according to Thiago Faganello, head of Brazil sales and partner at BTG Pactual. “The pandemic brought tons of uncertainty to the whole world, markets included. We have faced tough times, but here at BTG we quickly realized that we would need to be adapted to a new reality, a ‘transpandemic’ scenario, where life and markets should go on, even with no cure neither vaccines in the short term.”
Faganello said this mindset spurred the firm to place one of the first initial public offerings less than three months after the pandemic surge: car park operator Estapar, which priced its IPO on May 14 and helped to open the market. “After that, a lot of companies in Brazil realized that capital markets could help them face the turbulent times, and Brazil ended up the year of 2020 delivering 28 IPOs, worth around R$120 billion,” Faganello said. “I’m proud to say that BTG Pactual, as a bank, has had the unique vision to look ahead, beyond the pandemic, to keep doing what we are made for: to help and develop the capital markets in Brazil.”
Faganello said BTG Pactual is differentiated by its senior team and partnership model. “We have a senior team that work together since long time, focusing to deliver in a consistent way, keeping the excellence as the main target,” he said.
“We do know that the competitors have good talents around, but is hard to replicate talent together with partnership culture,” he added. “The service levels that you deliver changes a lot, because you think, work and sleep as a partner. And your clients recognize that.”
Following BTG Pactual on the leaderboard, which was weighted on each respondent’s research spending, were Bradesco BBI in second place and Itau BBA in third. JPMorgan Chase & Co. placed fourth and Santander rounded out the top five.
II also produced an AUM-based leaderboard, which nearly mirrored its commission-based counterpart.
Beyond the pandemic, other major events Faganello said investors have been focused on include the pension reform passed by Jair Bolsonaro’s government in 2019. The reform “should be celebrated in Brazil, even considering that we delivered it in the worst timing as possible, giving all the issues that the scenario brought,” which included raising the retirement age and redistributing some benefits, according to the BTG Pactual partner. “Of course it was not the best one that the market was expecting, but it was the possible one that the government could achieve in such a terrible time,” he added.
Currently, tax reform is under discussion, which is noteworthy, according to Faganello, because it signals a deeper level of commitment and sustainable growth to the street. “The perfect combination of reforms, privatization, low rates and growth is everything that investors are looking for, and this is why they are returning to invest in Brazil,” he added.
Looking ahead, Faganello predicted a less tumultuous electoral season next year based on the incumbent and potential candidates. “Brazil as a country used to face volatile times, and we can say that just by looking to the recent elections and impeachments,” he said. “But I would say that at this time, we might see a better and a much calmer scenario for 2022 elections.”
A continuation of the Bolsonaro government would mean little change for the country and a continuation of more reforms and privatization, while a candidate from the left party would be more likely to focus their positioning on the center. There is a chance, depending on population’s sentiment, that a third candidate from the center “might have even a better outcome, uniting the whole country and ending the polarization,” he added.
“The environment here in Brazil for 2022 should be almost the same as 2021, but with some small volatility close to the election period,” he said. “That means the financial deepening will be still there, with more IPOs, fixed income deals, and huge M&A activity. All this combined with a better outlook given the combination of people’s vaccinations and still high growth.”