Investment Banking in Brazil – How is the Brazilian market for investment banking? Would you be able to make your mark as a foreigner? How much are the investment banking salaries in Brazil? What types of deals do investment bankers typically handle in Brazil? How is the work culture? DoAmong the several exit options available to investment bankers are: 1.Private Equity 2.Hedge Funds 3.Strategy Consulting 4.Fin-Tech 5.Advisory for large corporates.read more investment bankers have any exit opportunitiesInvestment Bankers Have Any Exit OpportunitiesAmong the several exit options available to investment bankers are: 1.Private Equity 2.Hedge Funds 3.Strategy Consulting 4.Fin-Tech 5.Advisory for large corporates.read more?

This article will investigate the investment banking market in Brazil and try to answer all of the above questions. Let’s look at the sequence of the article.

In this article, we will talk about the following –

Source: gulf-times.com

Investment Banking in Brazil – Market Overview

Brazil is one of the most popular emerging markets in investment bankingInvestment BankingInvestment banking is a specialized banking stream that facilitates the business entities, government and other organizations in generating capital through debts and equity, reorganization, mergers and acquisition, etc.read more. A few things about Brazil make it a unique place for investment bankers. Let’s investigate the nuts and bolts of the investment banking market in Brazil –

  • The investment banking market in Brazil has grown so much over the years. And one would find both bulge-bracket international banks and local investment banks to handle and close deals.Brazil’s domestic banks win a lot of major deals, and the international banks advise on larger deals.Most of the companies in Brazil are family-owned. And naturally, they prefer domestic banks to handle major financing & other opportunities. But at the same time, these family-owned companies can’t let go of the experience bulge-bracket banks have in this regard. So, they recruit both – domestic banks and international bulge-bracket banks for larger and complex deals.There are usually two kinds of deals that are being executed. The first kind is M&A deals handled by bulge-bracket and domestic banks. And the second kind is restructuring deals that are being dealt with by boutique investment banksBoutique Investment BanksThe top boutique investment banks are - Perella Weinberg Partners (Global M&A Advisory – Boutique), Lazard (Global M&A Advisory), Rothschild (Global M&A Advisory – Boutique), Evercore Partners (Global M&A Advisory – Boutique), Greenhill & Co. (Global M&A Advisory – Boutique, Blackstone (Global M&A Advisory).read more in Brazil.Among all M&A deals, 99% of the deals are of M&A – sell-side.In Brazil, most of the companies are not audited. As a result, the analysts and associates have to spend a lot of time browsing historical information to prepare the reports. And they also spend a lot of time preparing lists of potential buyersThe team in every investment bank is pretty small. Only 20-25 people work in one team. As a result, they all need to work harder, and there’s almost no social life.

These are the few snippets of the investment banking market in Brazil. Let’s look at the services offered by these banks.

Investment Banking in Brazil – Services Offered

As already mentioned, investment banks in Brazil mainly deal with two kinds of deals – restructuringRestructuringRestructuring is defined as actions an organization takes when facing difficulties due to wrong management decisions or changes in demographic conditions. Therefore, tries to align its business with the current profitable trend by a) restructuring its finances by debt issuance/closures, issuance of new equities, selling assets, or b) organizational restructuring, which includes shifting locations, layoffs, etc.read more and M&A deals. But other than that, they also execute deals that revolve around the capital and debt market.

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Let’s have a look at the services offered by the Brazilian investment banks –

  • M&A Advisory: As mentioned before, this is the biggest service most investment banks in Brazil offer. From strategizing to structuring, every move is being executed by local investment banks and follows the advisory of bulge-bracket banks in the area.Capital Markets: Investment banks in Brazil always work on capital market deals. The deals they handle are both from equity capital markets and debt capital markets. These deals include IPO financing, debt financing, underwritingUnderwritingThe underwriters take the financial risk of their client in return of a financial fee. Market Makers like financial institution and large banks ensure that there is enough amount of liquidity in the market by ensuring that enough trading volume is there.read more, restructuring, issuing stock, bonds, etc.Corporate Lending: Investment banks in Brazil also offer corporate lending. Many family owned businesses want to expand their businesses, and for that, they need a commercial loanA Commercial LoanCommercial loans are short-term loans used to raise a company’s working capital and meet heavy expenses and operational costs. It is a kind of financing often used by small companies that cannot afford to raise money from equity markets and bonds. Banks and well-established financial institutions often provide commercial loans against the debtor’s financial statements and credit score.read more which they can use for large-scale expenditure. And for that, they go to local investment banks and ask for a commercial loan. And after doing their due diligenceDue DiligenceDue diligence is a thorough examination of information and strict adherence to the applicable rules and regulations. It ensures asset protection as well as the avoidance of malpractices and conflicts.read more, these investment banks offer corporate lending to these family-owned businesses.Sales & Trading: This is a very common service of every investment bank in any country. In Brazil, sales & trading are some of the most important services where investment banks offer services to their clients. These services include brokerage, research, and market-making.Energy Trading: In Brazil, energy trading is one of the unique services investment banks offer. They offer competitive energy and renewable energy services to independent producers, self-producers, free energy consumers, special consumers, public organizations, and agro-industry.

Now, let’s look at the list of top banks in Brazil.

List of Top Investment Banks in Brazil

We have two data points to look at the top investment banks in Brazil. First, we will look at the data of 2012 as per Global Banking & Finance Review, and then according to the Leaders’ League, we will glance through the best investment banks in M&A deals for the year 2016.

#1 – Global Banking & Finance Review

According to Global Banking & Finance Review, here’s a list of investment banks that stand out in the crowd in the year 2012 –

  • ABC BrasilBanco BradescoBanco Cruzeiro do SulBanco de BrasiliaBanco do BrasilBanco do NordesteBanco SafraBanco VotorantimBanestesBanrisulBicBancoBrazilian Development BankBTG PactualCaixa Economica FederalCentral Bank of BrazilDaycovalHSBC BankItau UnibancoPanAmericanoParana BancoSantander Brasil

#2 – Leader’s League

We will now look at the 2016 rankings in M&A deals given by the Leaders’ League. They divided the top investment banks again into four labels – leading, excellent, highly recommended, and recommended –

Leading: Under “leading”, here are the top investment banks in Brazil –

  • BradescoBTG PactualITAU BBA

Excellent: Under “excellent,” the top investment banks are –

  • Bank of America Merrill LynchGoldman SachsJP MorganRotschild & CIESantander

Highly recommended: Under “highly recommended,” the top banks are –

  • Banco VotorantimBarclays CapitalCitibank InternationalCredit SuisseDeutsche BankIGC PartnersLazardUBS Investment Bank

Recommended: Under “recommended,” these are the banks that made their mark –

  • AlbatrosBanco SafraBNP ParibasBR PartnersBrasilparCredit Agricole CIBEP CapitalG5 EvercoreGreenhill & CoLincoln InternationalPangea PartnersXingu Capital

Investment Banking in Brazil – Recruitment Process

Even if it seems that Brazil could be easy to get into investment banking, the truth is something else. It’s quite tough to get into investment banking in Brazil. If you would like to build a career in the investment bankingCareer In The Investment BankingAn investment banking personnel is a motivated professional who aims to help their clients reach their financial goals and objectives. The top four investment banking careers are - Analyst, Associate, Vice president, Managing director. read more in Brazil, the following pointers will help you leap –

  • Networking: Like any other place in the world, in Brazil, you need to put in a lot of networking effort to get started. You need to call everyone you know, you need to send a cold email to anyone you know who has a background in investment banking, and if needed, you have to meet them in person. You may get a lead or two through networking, and maybe some gates will open for you. Yes, no one would hand you an investment banking job in Brazil and say – “Go, have a great career”!Internships: Networking will take you far, but not as far as internships will. You need to do a couple of internships in investment banking (or at least in the finance domain) to be ahead of the crowd. Many people apply for full-time investment banking jobs in Brazil, and only a few are selected. And in Brazil, quite often, interns are being hired as full-time employees. So, without internships, you would have almost no opportunity to succeed. Also, check out – How to get an Investment Banking InternshipHow To Get An Investment Banking InternshipMany investment banks offer internships in investment banking, with durations ranging from 3 months to 2 years depending on the profile you choose as an intern. And if you complete your internship successfully, you will undoubtedly see yourself as an investment banker in the near future.read moreInterviews: In Brazil, there is one unique thing about the interview process in investment banking. It is given that you have a great network, you have already graduated from a top-notch university with a finance or relevant field, and you have at least a couple of internships under your belt. The first test you need to go through to qualify for the interview process is a test like GMAT. Once you’re through that test, the rest of the interview process is similar to the recruitment process of New York. After the test, you first need to face HR. If you’re through, you will have one-on-one interviews with analysts and then with associates. Then it would be best if you sat with VPs, EDs, and finally, MDs who will take the final call.Language & Entry Barriers:Entry Barriers:Barriers to entry are the economic hurdles that a new entrant must face in order to enter a market. For example, new entrants must pay fixed costs regardless of production or sales that would not have been incurred if the participant had not been a new entrant.read more Let’s say you work in another country and you would like to work in investment banking in Brazil. What would be your chances? In an ideal situation, your chances are bleak. You need to know the local language (Portuguese), and you need to stay in Brazil for some time to become a local person. Even when you have the skills, it would be difficult for a foreigner to get through as domestic investment banks only prefer local people.

Investment Banking in Brazil – Culture

As the team is smaller in small investment banks in Brazil, deals per person are also bigger. Every analyst/associate normally handles 5-6 deals at a time which is too much. As a result, no one could focus on one big deal properly.

In large investment banks in Brazil, things are much more difficult to handle. During a certain period, every analyst/associate handles 8-9 deals simultaneously.

So, you may think that the work hours would be huge. But in small investment banks, as an associate/analyst, you need to work around 55-60 hours per week. And in larger firms, as an associate/analyst, you would be working around 70 hours per week.

The work culture is quite hectic, and you would always be running for deals, reports, sourcing, presentations, and LOIs. And as the team is smaller, work pressure is much more. That means you can go to anyone (MDs, EDs, VPs), asking for anything. And at the same time, you need to take personal responsibility to close the deals. There’s almost no social life due to work pressure.

Also, have a look at Investment Banking LifestyleInvestment Banking LifestyleLong working hours, weekend work, a lot of hard work, and little sleep are all part of an investment banker’s life. Life as an investment banker is described as hectic, but for those who want to live a life of dedication, competition, and risk while also performing well, investment banking is the appropriate choice.read more

Investment Banking Salaries in Brazil

The investment banking salaries in Brazil are not exciting. If you consider the exchange rate of Brazilian Real with United States Dollars, you would see that 1 Real means only 0.30 USD.

Now, let’s look at Brazil’s average investment banking salaries first, and then we will discuss further.

source: glassdoor.co.in

You can now see the average salary of investment banking professionals. Let’s take the salary of the investment banking analystInvestment Banking AnalystInvestment Banking Analyst works with investment banking team and expertise in the area of Accounting, Financial Modeling, Project financing, Project Valuation, and Financial statement Analysis. These analyst has deep knowledge in Excel and they are good at VBA to analyze the market data and financial modeling. The analytic work consists of building a financial model for different projects like Infrastructure projects (i.e. Power projects, real estate, etc.).read more at Citi. The average salary for this individual is around R$175,000 per annum, which means in USD, it is less than US$60,000 per annum.

When investment bankers worldwide earn at least six figures, salaries in Investment Banking in Brazil look dim. However, for local candidates, maybe this is a great compensation.

Investment Banking in Brazil – Exit opportunities

People in Brazil don’t look for exit opportunities most of the time. Because it’s hard to get into investment banking and private equity, there are fewer chances of career growth.

In private equity in Brazil, people get hired directly out of college and get paid pretty little. So, you can understand why investment bankers don’t like to go into private equity.

But suppose you would like to quit investment banking and go for private equity. In that case, you can go for international funds because these international funds hire investment bankers with 2-3 years of experience!

Conclusion

Investment banking in Brazil is tough. If you’re a foreigner and would like to get a job in investment bankingJob In Investment BankingThe investment banking job description is a formal narrative that lists out the essential qualification, basic skills and technical skills required in a candidate to fill in the vacant investment banker position. It also explains the roles and responsibilities to be performed in this job position.read more, it would be almost impossible. However, if you can master the local language and have an extraordinary track record, you may crack the nut and land an offer.

This has been a guide to Investment Banking in Brazil, their services offered, recruitment process, culture, top investment banks in brazil, salaries, and exit opportunities. You may also look at the following article to learn more about Investment Banking.

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