Banco Bradesco SA (BBDC4) was Brazil’s top merger-and-acquisition adviser last quarter for the first time in more than nine years.
The lender’s investment bank, Bradesco BBI, advised on 10 deals totaling $5.95 billion announced during the period, according to data compiled by Bloomberg. Total volume decreased 28 percent from the first quarter to $16 billion, giving the Osasco-based company a 37 percent market share.
Bradesco pushed Banco Itau BBA SA from the top of the rankings after it was picked for the largest deal announced in the quarter, advising Cosan SA Industria & Comercio on its planned purchase of a stake in Cia. de Gas de Sao Paulo for 3.4 billion reais ($1.7 billion). Local banks such as Bradesco and Sao Paulo-based Itau are expanding in the M&A market by hiring away dealmakers and squeezing out foreign firms grappling with stricter capital requirements in their home markets.
“We are just starting to reap the gains of our long-term investments,” Sergio Clemente, an executive director at Bradesco, said in an interview. The company hired 30 people in the past two years for investment banking, Clemente said, and rose to No. 2 in equity underwriting in Brazil in the first half of 2012 from third for all of last year.
Clemente, who was responsible for Bradesco’s corporate, mid-size companies and international areas, added the broker- dealer, investment banking, asset management and private-banking to his list of responsibilities in January. Alessandro Decio Farkuh is Bradesco’s head of M&A.
“We were already in on companies’ day-to-day decisions and now we have an investment-banking platform that allows us to participate more and more on the strategic ones,” Clemente said in an interview. Bradesco has more than 18,000 corporate clients with about 220 billion reais in outstanding loans, according to Clemente.
Bradesco also advised cement maker Camargo Correa SA in the second-biggest takeover announced this year, a $5.43 billion buyout of Cimpor-Cimentos de Portugal SGPS shares. After the transaction, Sao Paulo-based Camargo Correa owns more than 90 percent of the Portuguese cement company.
“We are by far the biggest in acquisition financing in Brazil,” Farkuh said.
Itau fell to fourth place among M&A advisers in the second quarter, behind Sao Paulo-based Banco BTG Pactual SA (BBTG11) and Bank of America Corp. (BAC:US), based in Charlotte, North Carolina.
The number of M&A transactions in the second quarter increased to 208 from 161 in the first three months of the year, the data show.
“A lot of companies rushed to close their deals before the change in the antitrust rules in Brazil, on May 29, took place,” said Marcos Goncalves, head of M&A for BTG Pactual, referring to new regulations that force companies to obtain pre- approval for acquisitions from the nation’s antitrust regulator, known as Cade. BTG Pactual ranked first for all of last year and was fifth in the first quarter.
Some companies postponed deals to gauge the impact of the new regulations and Europe’s debt crisis, Goncalves said. “We have a very strong pipeline in the second half of the year,” he said.
The biggest announced transaction for the year is the proposed buyout of Redecard SA (RDCD3) by Itau Unibanco Holding SA (ITUB:US) for about $6.8 billion. The transaction helped Banco Itau BBA, Itau’s wholesale banking arm, reach the top ranking for the first half of 2012.
Citigroup Inc. (C:US) ranked third for the first half of 2012, up from 16th in the same period of last year, according to data compiled by Bloomberg.
“Our global platform has helped us leverage our top Brazilian team and work on cross-border deals like the Camargo Correa one,” said David Panico, managing-director of Citigroup’s investment bank in Brazil. New York-based Citigroup helped advise Camargo Correa on the transaction.
In March 2011, Citigroup hired Itau’s former head of investment banking, Andre Kok, to lead global banking for Brazil. Kok hired Renato Polizzi from Itau and David Panico from Bank of America as managing directors for Brazil investment banking.
Credit Suisse Group AG (CSGN) ranked second for the first half of 2012, the same spot the Zurich-based bank held in the first six months of last year.
“We had some big transactions this year, and I believe the second half can be better for M&A activity than the first,” said Fabio Mourão, a Credit Suisse managing director responsible for M&A.
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