BTG Pactual's initial public offering: Better Than Goldman? THE announcement on March 1st that BTG Pactual plans an initial public offering (IPO) came after weeks of speculation. André Esteves, the Brazilian investment bank's chief executive, had said before that an IPO was a matter of when, not if. A private deal in late 2010 with sovereign-wealth funds and rich families, including the Agnellis and the Rothschilds (both of whom have links with The Economist), had brought in $1.8 billion in return for 18% of the firm. But BTG has spent at least $1.5 billion on a series of takeovers in the past five months, eating up capital. The most recent deal, a cash-and-shares purchase of Celfin Capital, a Chilean brokerage, implied a valuation of $14.8 billion. The moment to list, it seemed, had arrived. With more cash, BTG will be able to continue its shopping spree without overstretch, applauds Ceres Lisboa of Moody's, a ratings agency. And Brazil could do with its own investment bank: global players such as UBS and Credit Suisse have been active there for some time but have pulled back because of the financial crisis. "BTG has advantages right now," says Ms Lisboa, "because it has Brazil expertise and a relative lack of global exposure." Mr Esteves's story is not quite rags to riches but is still impressive. He joined Banco Pactual in 1989 as a systems analyst, worked his way to the top and sold the bank to UBS in 2006 for $3.1 billion. Three years later his new fund, BTG (the initials stand for Banking and Trading Group but also, wags point out, Better Than Goldman), bought it back from the cash-strapped Swiss bank for $2.5 billion. The Celfin deal implies a price many times that - and, according to São Paulo gossip, three times the bank's book value. Talk of such multiples makes level-headed types nervous. Three times the value of assets minus liabilities is what Goldman Sachs listed at in 1999; it now trades below book value. Itaú Unibanco, Brazil's biggest private bank, trades at a bit over twice book value; BTG's return on equity is little more than at Itaú, although, at 25%, it is still eye-wateringly high by rich-world standards. But the bank is neither dragged down by the rich world's slump nor attached, like its local rivals, to a big, staid retail arm, says Oliver Leyland of Mirae Asset Global Investments. These guys have sold hundreds of deals; I'm sure they can sell themselves. The prospectus, when it appears, will be scrutinised not only for growth prospects and strategy - some of the cash is expected to be spent in Asia to capitalise on links between that region and Latin America - but also for reassurances regarding minority rights. BTG plans to offer non-voting shares as well as voting ones, a route few Brazilian firms have taken in recent years. The partners clearly have an eye to future offerings (it is expected to sell 10% of its shares this time) and the importance of maintaining control, says Ricardo Almeida of Insper, a São Paulo business school. BTG's listing will also be watched for signs of a revival in Brazil's moribund IPO market. In 2006 and 2007 companies listed at frothy prices almost weekly, but the most recent IPO was last July, since when a dozen or so planned deals have been postponed or dropped as risk-averse foreign buyers hang on to cash and sellers hold out for higher prices. The sense of urgency is now palpable, says Paulo Sergio Dortas of Ernst & Young, an accounting firm: companies know they cannot keep growing without cash. At least 40 are thought to be ready to list if the mood changes. Few will have a story to match BTG's - and as Brazil's biggest dealmaker, it will stand ready to profit when they finally do follow suit.