JPMorgan Strikes Deal For Brazil's Gávea Hedge Fund

Oct 27 2010 | 1:21pm ET

JPMorgan Chase's Highbridge Capital Management hedge fund division this morning announced its deal to acquire a majority interest in Brazil's Gávea Investimentos.

Terms of the agreement were not disclosed, although earlier media reports had Highbridge buying a 55% stake in the Brazilian hedge fund with an option over the next five years to buy the rest. The final purchase price for Gávea, which has about US$6 billion in assets under management, could reach US$800 million.

Highbridge said the acquisition was expected to close shortly.

"This has been a long courtship of one of the finest global macroeconomic hedge fund managers in the world," JPMorgan Asset Management CEO Mary Callahan Erdoes said of a process that began in February.

"Gávea is a fantastic organization that reflects not only Armínio Fraga’s well-deserved reputation as an exceptional economist and investor, but also his belief in the importance of creating a long-term business franchise,” said Glenn Dubin, CEO of Highbridge. “Gávea will provide Highbridge with greater macroeconomic insight and direct exposure to investing in Brazil, which will be a powerful addition to our investment capabilities.”

Fraga, Gávea's founder and a former Brazilian central bank governor, has agreed to remain with the firm for at least five years, according to published reports. In addition, co-founder and private equity co-chief Luiz Fraga, hedge funds co-chief Gabriel Srour, private equity head of portfolio management Chris Meyn, CEO Amaury Bier and wealth management executive Marcelo Stallone will all remain in place. Both Fragas are to join Highbridge's board of managers and executive committee, while Armínio Fraga will join Highbridge's investment committee.

"We believe that this transaction creates one of the most compelling partnerships in the industry, and we are delighted to be joining Highbridge and JPMorgan Asset Management,” Fraga said. “While our emerging market investment strategies can enhance Highbridge’s global platform, we will benefit from their successful track record of building businesses like ours. Ultimately, this partnership will ensure that we continue to perform for our clients.”

Highbridge said its relationship to Gávea would be similar to it's own relationship with JPMorgan. Day-to-day activities will remain in the hands of Fraga and the firm's other executives and its investment process is to remain unchanged.


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