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 is the investment banking salaries in Brazil? What types of deals investment bankers typically handle in Brazil? How is the work culture? Do 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.?
In this article, we 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 –
- Investment Banking in Brazil – Market Overview
- Investment Banking in Brazil – Services Offered
- Top Investment Banks in Brazil
- Investment Banking in Brazil – Recruitment Process
- Investment Banking in Brazil – Culture
- Investment Banking in Brazil – Salaries
- Investment Banking in Brazil – Exit opportunities
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.. There are a few things about Brazil that 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 as well as 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 which are being handled by bulge-bracket and domestic banks. And the second kind is restructuring deals that are being dealt with by boutique investment banks 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 through historical information to prepare the reports. And they also spend a lot of time preparing lists of potential buyers.
- The team in every investment bank is pretty small. Only 20-25 people work in one team. As a result, all of them 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 – restructuring and M&A deals. But other than that, they also execute deals that revolve around the capital and debt market.
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 of the investment banks in Brazil offers. 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., restructuring, and issuance of stock, bonds, etc.
- Corporate Lending: Investment banks in Brazil also offer corporate lending. Many families owned businesses want to expand their businesses and for that, they need a commercial loan 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 diligence, 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 also, 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 consumer, 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 list of 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 Brasil
- Banco Bradesco
- Banco Cruzeiro do Sul
- Banco de Brasilia
- Banco do Brasil
- Banco do Nordeste
- Banco Safra
- Banco Votorantim
- Brazilian Development Bank
- BTG Pactual
- Caixa Economica Federal
- Central Bank of Brazil
- HSBC Bank
- Itau Unibanco
- Parana Banco
- Santander 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 in four labels – leading, excellent, highly recommended, and recommended –
Leading: Under “leading”, here are the top investment banks in Brazil –
- BTG Pactual
- ITAU BBA
Excellent: Under “excellent”, the top investment banks are –
- Bank of America Merrill Lynch
- Goldman Sachs
- JP Morgan
- Rotschild & CIE
Highly recommended: Under “highly recommended”, the top banks are –
- Banco Votorantim
- Barclays Capital
- Citibank International
- Credit Suisse
- Deutsche Bank
- IGC Partners
- UBS Investment Bank
Recommended: Under “recommended”, these are the banks that made their mark –
- Banco Safra
- BNP Paribas
- BR Partners
- Credit Agricole CIB
- EP Capital
- G5 Evercore
- Greenhill & Co
- Lincoln International
- Pangea Partners
- Xingu 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. in Brazil, the following pointers will help you make the leap –
- Networking: Like any other place in the world, in Brazil as well, you need to put in a lot of networking effort to get started. Yes, no-one would hand you an investment banking job in brazil and say – “Go, have a great career”! You need to call everyone you know, you need to send a cold email to anyone you know who has the background in investment banking, and if needed, you have to meet them in person. Through networking, you may get a lead or two and maybe some gates will open for you.
- 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. There are a lot of people who 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 Internship
- Interviews: 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 been graduated from a top-notch university with finance or relevant field, and you have at least a couple of internships under your belt. Now 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 interview with analysts and then with associates. Then you need to be sitting with VPs, EDs, and finally, MDs who will take the final call.
- Language & Entry Barriers: 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, the ratio of deals per person is also much 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 at the same time.
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 culture of the work 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.
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 the average investment banking salaries in Brazil first and then we will discuss further.
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.). 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 all around the world are earning at least six figures, salaries in Investment Banking in Brazil really looks 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 in private equity, there are fewer chances of career growth.
In private equity in Brazil, people get hired directly out of college and they get paid pretty less. So, you can understand why investment bankers don’t like to go into private equity.
But if you would like to quit investment banking and go for private equity, you can go for international funds. Because these international funds hire investment bankers with 2-3 years of experience!
Investment banking in Brazil is tough. If you’re a foreigner and you 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., it would be almost impossible. However, if you can master the local language and can 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, their culture, top investment banks in brazil, salaries, and exit opportunities. You may also have a look at the following article for learning more about Investment Banking