New company is born with R$41bn and will have a compensation formula to draw, retain talents
Roberto Paris — Foto: Ana Paula Paiva/Valor
The creation of a new asset management company by Bradesco together with the assets that came from BV DTVM aims at building a structure similar to that of independent assets and wealth management firms. This means having a corporate model capable of attracting and retaining professionals, in addition to assessing possible acquisition opportunities, especially in the universe of alternative funds, said Roberto Paris, Bradesco’s managing director.
The deal complements a niche in which Bradesco’s asset management business did not operate directly, and makes this core of private banking originated from the BV base gain an appearance of wealth management, in which banks do not need to hold custody of assets, said José Alberto Salvini, CEO of BV. “It has to do with the partnership structure, to make things easy, aligned with the interests of investors, portfolio managers, and with more agility in offering more complex alternative products that require specific approvals, which can sometimes take longer in a conservative structure,” Mr. Paris said.
According to him, the investment industry in Brazil has undergone profound changes and, along the way, many specialized assets of several types have emerged. BV Asset has participation, development, and real estate funds. “Bradesco even provides clients with third-party [alternative] products, but it didn’t participate directly in this market,” Mr. Paris said.
The asset management company, with no name yet, is born with R$41.7 billion under its umbrella, and R$22 billion in private banking custody. The idea is that the new brand will not refer to any of the groups to which it will be linked and will even operate at different addresses of the two banks. At the end of July, BV ranked 24th in Anbima’s ranking of asset managers. It had R$12.9 billion in private-equity funds, including wealth management funds and investment organizations. The firm’s real estate funds have R$6.1 billion, and there are more R$8 billion in hedge funds. Fixed income, the large base of Bradesco Asset Management (Bram), totaled only R$11.3 billion.
According to the agreement, Bradesco will hold 51% of BV DTVM’s capital, will have a majority of representatives on the board and the members will choose jointly who will be the executive leadership of the operation. Currently, the asset management company and BV’s private bank are institutionally represented by Luiz Sedrani, the firm’s chief investment officer. The value of the deal was not disclosed.
Mr. Salvini, with BV, said that the partnership with Bradesco makes perfect sense because the portfolios complement each other. On top of that, having access to a giant distribution channel, such as Bradesco’s, is an advantage, as well as other possibilities that arise from the partnership. “Our private banking model is likely to improve a lot. Bradesco offers products that we don’t have, they have BAC in Florida [which props up Bradesco’s platform in the U.S.], and our clients will be able to use this channel,” he says.
According to him, if BV DTVM had partnered with BB Asset, from Banco do Brasil, of which BV is a partner, this would not bring so much difference in the supply of products. In addition, as the asset management firm is controlled by a state-run bank (Banco do Brasil), it would face more difficulties in hiring professionals in an industry in which the compensation model is tied to the performance of the funds.
BV is focused on retail, and the executive realized that if he wanted to do something different, he would need to find a strategic partner. “We didn’t even get to talk to other players, the match with Bradesco was complete.”
Today, BV DTVM is connected to the main investment platforms, although with a small presence in some. The association with Bradesco does not change this performance. The offer to private-banking clients is likely to include investment consolidation services, access to other applications, and an online trading platform, in addition to estate and succession planning.
As for the products offered, the BV DTVM’s executive acknowledged that the company is known for its structured funds but says that it does not intend to be limited to that. “We will also have liquid funds, with very specialized people.” Considering the custody part, BV DTVM has almost 150 employees. Mr. Salvini says the private-banking team is being expanded, but that the staff does not need to grow that much in the coming years.
In its history of consolidation, Bradesco has always preferred complete acquisitions, but this design is not defined at the start of the deal with BV. “At the first moment, it is a partnership, that’s what you have, and it is expected to continue for a long time. As time goes by, everything can be evaluated, but the goal is to keep this structure to serve the client and consolidate itself as an independent reference asset management company,” says Mr. Paris. Mr. Salvini said that it is not in BV partners’ plans sell the entire operation.
This year, Bradesco took over BNP Paribas’ wealth management portfolio in Brazil and had already made a similar move with J.P. Morgan’s private equity structure. “The strategies are ultimately aimed at strengthening services to high-income clients,” Mr. Paris says. In 2015, one highlight of the acquisition of HSBC was the high-net-worth client base the English group had in Brazil. Bradesco gathered then R$100 billion in private banking and about 15% of that came from HSBC. Currently, Bradesco has R$380 billion in private banking and R$544 billion in asset management.
*By Adriana Cotias, Álvaro Campos — São Paulo