Brazilian bank 'agrees to sell 12% stake in hospital chain to GIC'

SAO PAULO • Brazilian bank Grupo BTG Pactual has agreed to sell its 12 per cent stake in Rede D'Or Sao Luiz, the country's largest hospital chain, to Singapore's sovereign wealth fund GIC for almost 2.5 billion reais (S$924 million), sources said on Sunday.

An announcement to the effect was to be signed yesterday.

Executives at the Sao Paulo- based bank had been negotiating exiting Rede D'Or since August, although the arrest last week of BTG Pactual chairman Andre Esteves sped up talks, two other sources said.

Mr Esteves was arrested as part of "Operation Car Wash", a probe into links between ruling coalition politicians and company executives who allegedly traded contracts at state firms for bribes and campaign donations.

He was held on suspicion of obstructing a bribery investigation centred on Brazil's state-controlled oil and gas firm Petrobras, an allegation his lawyer, Mr Antonio Carlos de Almeida Castro, has denied.

Late on Sunday, Mr Esteves resigned as chief executive and chairman of Grupo BTG Pactual. Prosecutors are preparing to file charges against the billionaire dealmaker.

GIC paid 3.3 billion reais for a 16 per cent stake in Rede D'Or in May. The other partners in Rede D'Or are Brazil's Moll family, which founded Rede D'Or in 1977, and Carlyle Group. Carlyle bought a 4 per cent stake in Rede D'Or from BTG in April, as well as a 4 per cent stake from the Moll family. BTG had been discussing since August a divestment of another 4 per cent in Rede D'Or with Carlyle, the sources said.

According to one of these two sources, the Molls showed no interest in increasing their stake, and GIC recently emerged as the preferred candidate.

The new deal could help shore up BTG Pactual's balance sheet after Mr Esteves' arrest prompted clients to pull out US$1 billion (S$1.4 billion) in investments held at the bank's asset management division.

His detention sent the bank's shares and bonds skidding as investors fretted about its ability to thrive in his absence. Rating agencies Moody's Investors Service and Fitch Ratings warned of a possible rating downgrade.

BTG Pactual has declined comment on the unfolding reports, as did representatives for Carlyle and GIC. Media officials for the billionaire Moll family could not be reached for comment.

The Molls and BTG Pactual became partners at the end of 2010.

Bloomberg News reported on Sunday that partners at BTG Pactual are in talks to buy Mr Esteves' 28.8 per cent controlling stake in the bank after his arrest.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on December 01, 2015, with the headline 'Brazilian bank 'agrees to sell 12% stake in hospital chain to GIC''. Print Edition | Subscribe