September 22, 2016 / 10:21 PM / in 2 years

BTG Pactual replaces buyout unit head Hallack, sources say

SAO PAULO, Sept 22 (Reuters) - Grupo BTG Pactual SA has replaced Marcelo Hallack as managing director of private-equity investments, two people with knowledge of the decision said on Thursday, as Latin America’s largest independent investment bank scales down proprietary investments to protect capital.

Hallack, a Stanford University graduate who joined BTG Pactual in 2008, will be replaced by Renato Mazzola, currently the head of proprietary infrastructure investing, said the people, who requested anonymity due to the sensitivity of the matter.

Hallack, who became a partner at the São Paulo-based bank in 2009, shared responsibility for managing BTG Pactual’s private-equity unit with fellow partner Carlos Fonseca, who recently moved to oversee real estate investments.

Efforts to contact Hallack for comment were unsuccessful. A media representative for BTG Pactual declined to confirm the executive’s departure and replacement.

BTG Pactual’s buyout unit undertook more than two dozen purchases with proprietary and client money during a half-decade of active dealmaking led by billionaire founder André Esteves. The frenzy ended abruptly last November, when Esteves was arrested for his alleged involvement in a corruption scandal.

BTG Pactual, which Esteves wanted to build into the largest independent investment banking firm in emerging markets, had to quickly shed assets and tap emergency funding from Brazil’s deposit guarantee fund in the wake of Esteves’s arrest as investors fled.

Over the past seven years, the unit committed around $10 billion from the bank’s and clients’ money to land, company stakes, property and infrastructure projects. The strategy, encapsulated in Esteves’ definition of BTG Pactual as “an investment bank that invests,” turned on its head after the buyout unit was forced to sell many of its investments since November.

The asset sales, however, will likely leave BTG Pactual with $1 billion in excess capital by year-end. The bank agreed to further cut private-equity investments when it took a 6 billion-real ($1.9 billion) lifeline from a financial industry-backed deposit guarantee fund last year, a person familiar with the matter told Reuters in August.

None of the people said when Hallack’s departure took place. The news were first reported by newspaper Valor Econômico earlier on Thursday.

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