BR Partners reported a first quarter with records in different lines of the balance sheet: it was the highest profit and revenue in the company’s history, and the highest ROE since the entry of IPO resources in 2021.
The investment bank delivered a net profit of R$49 million, with an ROE of 24%, compared to the ROE of 21.6% in the previous quarter and 16.6% in the first quarter of last year.
Net revenue was R$137.6 million, an increase of 10.7% in the sequential comparison and 35.5% year over year.
CEO and founder Ricardo Lacerda told Brazil Journal that the increase in ROE had to do with very strong activity in the capital markets and M&A.
“In the fourth quarter we had already shown a resumption of activities and we continued in the same vein this quarter, with the capital market still extremely heated,” said Lacerda.
Revenue from investment banking and capital markets totaled R$77.7 million, a growth of 2.9% compared to the fourth quarter and 68.6% compared to the first quarter of last year.
BR Partners announced relevant transactions in the quarter, which should be reflected in the results of the next quarters: the sale by Cemig of Aliança Energia to Vale (a transaction worth R$2.7 billion) and the follow-on of GPA, which placed R$700 million in the company’s cash flow.
These deals are in addition to other large recent transactions that BR Partners led, such as the purchase of Amil for R$11 billion by businessman José Seripieri Filho, Júnior, and the sale of Banco Nacional’s assets to BTG.
M&A activity should remain strong in the second quarter, said Vinicius Carmona, the director of investor relations, despite the market’s changing mood with interest rates in the US and fiscal uncertainty in Brazil.
“Despite the robust pipeline, these uncertainties, if they persist, could frustrate activity somewhat later in the year,” he said. “Companies in the deleveraging process will have more difficulty or need more time, and this may slow down M&As activity a little.”
In the capital market, performance is strong because companies are raising money “where there is money,” said Vinicius.
“As the ECM is closed, there are many companies raising funds via the debt market,” he said, adding that the majority of funding is still for renegotiating or reprofiling debts and for the development of real estate projects and corporate finance.
“For investments, funding is still very timid. We need to have a more encouraging level of interest for them to come back.”
The only vertical that fell this quarter, in the sequential comparison, was treasury. After a strong fourth quarter, BR Partners saw currency and commodity hedge activity lose momentum, as these assets became more stable in the period.
Furthermore, competition in derivatives is more aggressive, with some players pricing operations at very low costs, which has resulted in BR Partners being left out of some operations.
“There are people wasting money on some derivatives risk pricing,” said Marcelo Costa, the bank’s CFO.
In this context, treasury revenue fell 21.3% compared to the fourth quarter, and rose 47.6% year on year.
In asset management — the vertical that encompasses BR Partners’ wealth management, which was launched at the end of last year — revenue was R$2.1 million. The company added around R$400 million to the assets under advisory, bringing the amount to R$2.7 billion.
This quarter, BR Partners began publishing a new indicator: net revenue/managing director. This metric, very common among American investment banks, shows the efficiency of the operation and was R$9.7 million this quarter.
Vinicius said the average American IB is around US$2 million, in line with the BR Partners figure.
In the fourth quarter, this number was higher, at R$12.4 million, but BR Partners had two fewer MDs. At the beginning of the year, the bank promoted Rodrigo Moraes, the CIO of Wealth, and Fabiana Balducci, who takes care of the restructuring area, bringing the number of MDs to 10.
The company also increased its partnership to 36 members, promoting 10 executives to partners.
The investment bank also announced that it will distribute R$31 million in dividends, a payout of 63% of the profit for the period.
Pedro Arbex
