Brazilian asset management firm Pátria Investimentos took over three equity funds from a smaller rival on Wednesday, seeking to meet client demand for more liquid assets, executives said in an interview.
São Paulo-based Patria will add MainStay's Long Short FIM, Equity Hedge FIC FIM and Ações FIC FIA funds into its portfolio, senior partner Olímpio Matarazzo Neto said in an interview late on Tuesday. Asset managers serve clients including sovereign wealth and pension funds, corporate treasurers and university endowments.
By broadening the supply of financial products it offers, Pátria wants to give its clientele, 50 percent of which is based outside Brazil, all possible options to invest in Brazil at a time when interest rates have fallen to a record low and the economy is emerging from a year-long slowdown.
Currently Pátria oversees 10 billion reais in investor money, more than 90 percent of it in less liquid instruments such as private equity investment vehicles and infrastructure funds.
"What we want to do is to create a complete platform of products so our clients needn't look out for anything else," Matarazzo Neto said. "This move makes all possible sense because our illiquid funds operations is gaining a leg on liquid funds thanks to MainStay."
MainStay's three funds currently have about 80 million reais ($39 million) in equities. Flávio Menezes, MainStay's founder, and four of his employees will join Pátria as part of the deal.
After merging MainStay's funds, Pátria will have 170 million reais worth of equity investments under management. The firm manages a total 750 million reais in bonds, stocks and other so-called liquid assets.
Brazilian asset managers are merging with or acquiring rivals as a government crusade to bring down borrowing costs in Latin America's largest economy is hampering returns. A decline in interest rates, which has extended for more than a year, is forcing funds to build a more diverse base of financial instruments to help lure new clients.
In September of 2010, U.S. private equity firm Blackstone Group paid about $200 million for a 40 percent stake in Pátria Investimentos, aiming to expand in the world's No. 2 emerging market economy.
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