By Luciana Magalhaes and Marcela Ayres
A consortium led by Brazilian investment group Fictor and unnamed investors from the United Arab Emirates agreed to buy embattled Brazilian lender Banco Master, Fictor said in a statement on Monday.
THE DETAILS
• The deal includes an immediate capital injection of 3 billion reais ($562.48 million), the establishment of a new board of directors, and the change of the name to Banco Fictor.
• The deal was submitted for central bank approval on late Monday, Fictor said; it also needs greenlight from antitrust regulator CADE.
• The consortium is purchasing the entire stake held by controlling shareholder Daniel Vorcaro in Master.
• The agreement does not include Master-controlled Will Bank and Banco Master de Investimentos, which are being sold separately.
• Master declined to comment.
CONTEXT
• The announcement follows a failed bid by state-run lender BRB (BRLI3.SA) to acquire the distressed bank, which was rejected by the central bank in September.
• Vorcaro has been selling assets in an effort to shore up Master's liquidity and prevent the need for intervention by Brazil's central bank.
• Master's funding has largely stemmed from high-yield debt distributed via investment platforms.
• Those securities, covered by Brazil's deposit insurance fund in the event of a bank failure, were key to Master's rapid expansion in recent years, putting it under increased scrutiny.
• Now facing liquidity problems, it needed fresh capital to meet upcoming maturities.
KEY QUOTES
• "BRB is a public bank. Now we're talking about full private capital, with a different strategy and profile," Rafael Paixao, a partner at Fictor, told Reuters.
• Will Bank and Banco Master de Investimentos are also being sold by Master, but to other buyers, Paixao and his partners Rafael Goes and Felipe Rubini said in an interview.
• They said the three deals are separate, but they likely depend on each other to be completed.
THE BUYERS
• Fictor has interests in the food, financial and infrastructure industries, including Sao Paulo-traded food producer Fictor Alimentos BMFBOVESPA:FICT3.
• The UAE investors in the deal will be announced on Friday, partners at Fictor told Reuters in an interview.
• Fictor said the deal would allow it to enter the banking sector as a "strategic step" to strengthen its financial services platform.
• The unnamed UAE investors in the consortium might be unveiled on Friday and have more than $100 billion under custody, according to Fictor and its partners.